By Ronald Kim

January 26, 2024 - Coal's share of the global power generation mix will fall below 33pc over the next three years from last year's 36pc, with the fuel overtaken by renewables by early 2025, the International Energy Agency (IEA) said in its Electricity 2024 report published today.

The Paris-based agency expects global coal-fired generation to fall by 1.7pc/yr over 2024-26. Having increased by 1.6pc from a year earlier to 10.6PWh in 2023, global coal-fired generation is expected to fall by 3pc this year, assuming a recovery in hydropower output in regions where coal-fired plants filled a supply deficit last year. The world's average hydropower capacity factor was below 40pc in 2023, the lowest for at least three decades.

The report highlighted that a drought-led 5.6pc year-on-year drop in China's hydropower generation contributed to a 6.2pc gain in the country's coal-fired output last year, with the solid fuel meeting 60pc of annual power demand growth, in line with its share of 62pc in China's power mix. But coal's share is on track to drop to 51pc by 2026 because China's expanding renewable and nuclear capacity will meet most of the further increase in power demand during the next three years. China will add 40-50GW of coal-fired capacity by 2026, but output will drop by 1.5pc/yr in 2024-26, the IEA said. Chinese coal-fired generation will depend on the country's economic rebalancing, hydropower trends and grid bottlenecks during the renewables rollout, the report added.

Similarly, a hydropower shortage in 2023 supported coal-fired generation in Vietnam, while a 15pc fall on the year in hydropower output led the Indian government to mandate local coal-fired operators to blend imported coal with domestic inventories until March 2024 to mitigate the power supply deficit.

India's power demand is forecast to rise by 6.5pc/yr until 2026, the strongest among major economies. Indian coal-fired generation is expected to grow by 2.5pc/yr over the three-year period, while growth in Bangladesh and Pakistan is expected at 18pc/yr and 6pc/yr, respectively.

Southeast Asian coal-fired output is on track to increase by 4pc/yr in 2024-26. Indonesia's coal-fired output is projected to rise by 5pc/yr, while coal's share in Vietnam's power mix will edge down to 43pc from 46pc in 2023.

In northeast Asia, Japan and South Korea are both set to cut coal-fired generation by 3pc/yr until 2026, owing to firmer nuclear output. Japan is scheduled to restart the 825MW Onagawa 2 and 820MW Shimane 2 reactors this year, while South Korea will expand its nuclear capacity to 29GW in 2026 from 25GW in 2022.

Europe, Turkey and Africa

European coal-fired generation, including Turkey, is projected to drop by 10.4pc/yr until 2026 to 402TWh, driven by the sluggish recovery of power demand and the continuing phase-out of coal. EU coal-fired generation — including lignite — is expected to fall by 13pc/yr in 2024-26, with German coal burn sliding by 20pc/yr. Coal will comprise only a quarter of Turkey's power mix in 2026, down from 36pc in 2023, according to the IEA.

In contrast, Africa's coal-fired generation is set to rise by 1.2pc/yr over the next three years to 238TWh.

At a global level, the IEA foresees a slow structural decline of around 1pc/yr in coal-fired generation over the next two years to 10.1PWh, suggesting that global coal-fired output peaked in 2023. LNG supplies coming on line from 2025 will support coal-to-gas fuel switching, the agency said, but it declined to comment at what price such a transition would accelerate. Gas replaced the bulk of coal-fired output in the US last year, the report noted.