Most of the world’s coal-fired generating units consist of boilers and steam turbines that can be 30% less efficient when compared with natural gas-fired combined-cycle units using the latest technology. Because natural gas generators are more efficient than coal-fired generators at converting fuel to electricity, natural gas-fired generation is often a lower cost option, even if the fuel price of natural gas is slightly higher than the fuel price of coal. However, rising natural gas prices after 2030—particularly in Asia and other areas that are reliant on higher-cost liquefied natural gas (LNG) resources—coupled with the absence of enforceable global emission-reduction policies or regulations, cause coal-fired generation to become more economic in supporting increased intermittent generation. This shift represents a reversal of the trend observed over recent decades. Even though the cost of mining coal will face some upward pressure after 2030, we project coal prices to remain lower relative to natural gas, providing a cost-competitive generation option to natural gas-fired power generation. Similarly, existing sources of coal-fired capacity continue to cost less than battery storage in some regions.
Increases in coal-fired generation in Other non-OECD Asia—which includes Indonesia, Vietnam, and Thailand, among other countries—alone account for over three-quarters of the world’s coal-fired generation increases from 2030 through the end of the projection period. In Other non-OECD Asia, while renewable energy sources—primarily wind and solar—account for about 60% of the generation increase over the projection period, coal-fired generation accounts for nearly all of the remaining growth. This region is geographically diverse, and several of the countries in this region have limited domestic natural gas resources and have constrained access to natural gas pipelines and LNG regasification terminals. Without the presence of enforceable region-wide carbon emission reduction policies or regulations, abundant coal resources that can be competitively mined, combined with natural gas prices that are projected to increase after 2030, lead to coal-fired generation displacing some natural gas-fired generation from 2030 through the end of the projection period. As coal-fired generation steadily increases through 2050, coal’s share of the generation mix increases from about one-third in 2020 to almost half by the end of the projection period.
Although nearly 330 GW of battery storage is built in India in the Reference case—representing about half of the world’s projected battery storage capacity by 2050—we do not project battery capacity growing quickly enough to provide sufficient backup capability for the rapidly growing share of renewable sources in the region. As a result, coal-fired generation helps meet baseload and peak-period power demand. Coal-fired generation accounts for two-thirds of India’s generation mix in 2020. Even though coal-fired generation will likely increase by about 25% throughout the projection period, the Reference case projects that coal will account for less than one-quarter of India’s generation mix by 2050. By this time, wind and solar resources will account for two-thirds of India’s total generation mix.
Under current laws and regulations, coal remains a significant player in the global electricity generation mix through 2050.