New Coal Plants Are Just Too Expensive in China, Analysis Says (Bloomberg News – April 22, 2019)

China’s green light to build more coal-fired power plants probably won’t usher in a flurry of new construction as most policies and investments in the top energy user will tilt toward renewable sources.

More than 10 regions will be freed of their overcapacity tag in 2022, clearing a hurdle for them to resume building coal-fired plants. But many of the nation’s largest power companies are under a state drive to develop more clean energy projects, according to Morningstar Inc., which expects growth in coal-fired capacity to lag other sources.

“The profitability of coal-fired power plants is so low, there’s no incentive for them to build more,” said Morningstar analyst Jennifer Song. “China as a whole has set consumption targets for renewable energy sources. We can see those large power groups also have quotas to build more renewable projects.”

Coal mining stocks fell Tuesday in Hong Kong, the first trading day after the National Energy Administration statement Friday. Coal mining stocks on Monday in Shanghai gave up gains after the National Energy Administration statement Friday. Mainland shares remained subdued Tuesday.

Businesses and governments are tracking China’s efforts to transform its energy mix as its massive scale could shape global trends and spur a faster transition toward renewable energy.

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