Coal will play a major role in meeting the energy needs of emerging countries over the next ten years, as India and China have abundant reserves, according to Global Prospects for Coal-Fired Power Generation, a new report from the business research and consulting firm Frost & Sullivan.
Countries such as the US, Russia, China and Australia also have huge coal reserves.
Harald Thaler, industry director at Frost & Sullivan, said:
China, India and the rest of Asia are the key focus areas for coal-fired investment in the coming decade. Strong projected electricity demand growth and low production costs make the region attractive for both domestic and global participants.
The analysis finds that Indonesia and Vietnam will emerge as major countries fuelling demand for coal-fired electricity generation. Japan and Korea will offer limited prospects, while Australia will experience strong growth.
Yet reliance on gas and oil in the Middle East, on hydroelectric power in South America and poor infrastructure and political stability in Africa will limit the prospects for coal-fired power generation in these regions, said Frost & Sullivan.
North America and the European Union will continue to be key markets for coal due to large units of capacity decommissioning, which means large megawatt capacity orders as replacements.
However, prospects for coal-fired power generation in Europe and North America are currently looking bleak due to the threat of tougher regulations, uncertainties over future carbon prices and the development of carbon capture and storage (CCS), rising engineering procurement and construction (EPC) costs, and low gas prices.
Thaler warned that financing issues for large coal-fired plants are likely to recede as electricity demand across emerging geographies recovers. In Europe, order levels for steam plants, meanwhile, are expected to pick up over the next few years as capacity needs to be replaced in some countries that are affected by closures mandated by the large combustion plants directive. "Order levels will increase again as the technical and commercial viability of CCS is proved," Thaler said.