Page 6 - AfrElec Week 38 2021

AfrElec COMMENTARY AfrElec

Coal investment in power-poor

countries continues to hold up

GLOBAL INVESTMENT in new coal-fired power plants and their supporting infrastructure make it
has proved to be strong in countries with low impossible for coal to increase electricity access
access-to-power rates, a recent report from the to meet Sustainable Development Goal 7’s
Climate Policy Initiative (CPI) and SEforALL (SDG7) target of universal access by 2030. Dis-
warned. tributed renewable energy generation provides
So-called high-impact countries (HIEs) in the most efficient path to scale up access to elec-
Asia, led by Bangladesh, India and Pakistan, have tricity in the near term.
received the majority of finance commitments to The report said that Ondia is expanding new
new coal plants since 2013, the report said. coal-fired power generation capacity at by far the
African HICs, principally Madagascar, greatest scale and is home to 87% the total coal
Mozambique, Malawi, Niger and Tanzania, all generation pipeline currently under active devel-
currently boast active coal plant development. opment in HICs.
The report looked at 18 HICs and found Nevertheless, new finance commitments to
that international public finance comprised coal plants in India have slowed in recent years,
the highest proportion of finance committed representing only 20% of such commitments
to new coal-fired power plants since 2013. This among HICs in the three years from 2017-2019
compares with renewable power plants, where on average, compared with 45% in the three
nearly 60% of finance for new projects has been years from 2014-2016.
committed by domestic private investors in the Since 2016, Chinese financial institutions
same period. Financial institutions based in have committed $14bn to finance coal plants
China account for 40% out of the total of $42bn in Bangladesh, Pakistan and Kenya, driving the
in finance committed to coal-fired power plants uptick of coal finance to HICs outside India.
in HICs between 2013 and 2019. Although Chi- The report said that India currently had
nese institutions are the largest coal investors in 23,358 MW of coal power under development,
HICs, privately held financial institutions based while Pakistan had 3,300 MW and Bangladesh
in the US currently account for 58% of all invest- 4,094 MW.
ment in the global coal industry. In Africa, Mozambique leads the way with
Countries receiving coal power finance face 800 MW of coal development in the pipeline,
substantial socio-economic and environmental followed by Tanzania with 420 MW, Malawi with
risks associated with the newly commissioned, 400 MW, Niger with 200 MW and Madagascar
carbon-intensive assets, the report warned. with 60 MW.
For instance, infrastructure constraints and However, there have been exits from coal,
lower than expected demand in Bangladesh and with the report highlighting that the Chinese
Pakistan have resulted in underutilisation of withdrawal from the Lamu coal-to-power pro-
newly commissioned coal-fired power plants, ject in Kenya in 2020 effectively sealed the fate of
highlighting the stranded asset risk associated the $2bn, 1-GW project.
with their construction. Should sub-Saharan The AfDB had exited in 2019, as had tech-
African nations continue to develop new coal- nology supplier General Electric in 2020. This
fired power generation capacity, they are likely left China’s ICBC Bank, PowerChina Group and
to face similar challenges and costs. China Huadian to be the last to quit in Novem-
Furthermore, the long development time- ber 2020 after major legal action over environ-
lines associated with thermal power generators mental opposition. ™

P6 www. NEWSBASE .com Week 38 23•September•2022