A cleaner future for coal-fired power plants and coal-dependent communities – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology
This article is brought to you through The European Sting’s collaboration with the World Economic Forum.
Author: Melissa Stark, Head, Global Renewables & Energy Transition, Accenture, Fabio Cataudella, Head of Power Plant Repurposing, Enel & Jorge Mayer, Head of Stakeholder Management, EDP – Energias de Portugal
- Most emerging economies still rely heavily on coal for power generation.
- As the world moves towards a future based on renewable energy, it is important to seek responsible solutions for coal assets and for the communities where they create jobs.
- Companies like Enel and EDP are finding innovative solutions to reallocate their coal assets and create new jobs for coal plant workers.
At the launch of the B20 earlier this year, Indonesian President Joko Widodo highlighted his country’s potential for 418 GW of renewable energy generation. In a country where up to 60% of the energy mix comes from coal, he added that his government was preparing to withdraw up to 5.5 GW of coal generation capacity, while carefully exploring how this transition could affect negatively the lives of Indonesians.
Lessons from companies like Enel and EDP, which have transformed coal assets into renewable energy while caring for local communities, can help in this conversation and are essential for the gradual reduction of the coal commitment at COP26.
The role of coal in the energy transition
Today, coal accounts for 44% of global CO2 emissions and 40% of installed global production capacity. Of this number, 75% are located in Emerging Markets and Developing Economies (EMDE), which depend on coal power for economic development and community energy assurance.
As energy needs increase in EMDEs, plans are in place for the construction of an additional 500 GW of coal-fired capacity in the next 10 to 15 years. At the same time, if the world is to stay on track to reach net zero by 2050, the IEA estimates that all relentless coal must be phased out by 2040.
The good news is that renewable energies are increasingly competitive. Today, 77% of the levelized cost of energy (LCOE) of new renewables is lower than that of existing coal. By 2030, this share will be 99%.
The various benefits of reassignment
The transition from coal to renewables is not only about the LCOE of these technologies, but also about the effects on all stakeholders involved. This includes the impact on people who are directly employed by coal-fired power plants, people who indirectly depend on them for employment, and the communities built around them.
The conversion of coal-fired power plants into renewable power plants is a key element of the just transition. Apart from its social benefits, the repurposing of coal-fired power plants also has other advantages and benefits. These include land space, interconnecting lines, generators, synchronous capacitors and substations.
Enel and EDP, for their part, have spent the last decade switching from thermal to renewable energy. This dynamic includes the commitment to the dismantling of coal-fired power plants.
Enel has pledged to completely phase out coal by 2027 and the rest of thermal power by 2040. It has also pledged to breathe new life into these plants, with the aim of maximizing their use by as energy suppliers by reallocating them to solar, wind or green hydrogen sources. , storage options or synchronous compensators.
Enel’s approach to reassignment focuses on cooperating with local stakeholders throughout the process and on fully retaining all non-retiring employees. Circularity is also a major concern. Enel aims to reuse as many key components of the coal-fired power plant as possible without creating unnecessary waste. Enel’s commitment also goes beyond its employees. It helps suppliers transform their businesses and retrain their employees to adapt to a transformed operating model.
Energy companies lead by example
In Spain, Enel is repurposing the Teruel coal-fired power plant, replacing an installed capacity of 1,100 MW with a large 1,500 MW renewable hybrid power plant, including solar, wind and battery storage. In Chile, it is transforming the Tarapacá coal-fired power plant into a hybrid project that will include a photovoltaic power plant, an energy storage system and space for salt storage by a third-party company.
EDP, meanwhile, is accelerating its energy transition by committing to be coal-free by 2025. It is aiming for carbon neutrality by 2030 – with 100% renewable energy production.
EDP is preparing to close its coal-fired power plants. Its energy transition projects in Portugal, Spain and Brazil are well advanced. In January 2021, EDP closed Sines, Portugal’s largest coal-fired power plant and will turn this disused site into a green hydrogen hub.
EDP’s reassignment plans follow a multi-stakeholder approach. Here, government, academia, NGOs, EDP and its suppliers are all working together to ensure the creation of new economic activity in the communities. EDP’s hydrogen-related activities include a green ammonia pilot project, a 100 MW green hydrogen production facility and a collaborative laboratory to promote hydrogen knowledge exchange.
EDP aims to ensure that no direct employee loses their job. Similarly, they want to see supplier employees access jobs in renewable energy. To do this, EDP offers retraining, psychological and social support to all supplier employees affected by the closure of Sines.
The Coal to Renewables Initiative
Enel and EDP recently presented their stories at the inaugural meeting of the Coal to Renewables initiative, launched by the World Economic Forum. This collaboration with Accenture is a unique space where more than 50 actors from energy, finance and civil society exchange best practices and seek partnerships to accelerate coal beneficiation projects.
The initiative allows participants, such as Enel and EDP, to share real case studies and the challenges and opportunities encountered in the transition from coal to renewable energies. It also contains a practical toolkit featuring case studies on technology, finance, just transition and planning. The aim is to create a shared understanding and effective partnerships for a just transition.
If you would like to be part of the initiative or learn more, please email [email protected]