A report by the Carbon Tracker Initiative has revealed 79% of EU coal plants are running at a high financial loss because they can't compete with cheap renewables. A German company faces the biggest loss.
The majority of coal plants in the European Union (EU) are unprofitable and could face losses of nearly €6.6 billion ($7.3 billion) this year, the Carbon Tracker Initiative reported on Thursday.
The London-based think tank analyzed the numbers behind every coal plant in the EU, concluding that 79% of the electricity-generating power stations are running at a loss.
"EU coal generators are hemorrhaging cash because they cannot compete with cheap renewables and gas and this will only get worse," said Matt Gray, co-author of the report.
Lower costs for renewable energy and natural gas are increasingly competitive versus coal in electricity production.
Hard coal generation had fallen 39% this year from the year prior.
German firms facing highest loss
German energy giant RWE faces the biggest financial losses, estimated at around €975 million, according to the report. That represents 6% of its market capitalization.
RWE denied the allegations in the report.
"The numbers and assumptions do not stand up to the facts. They are wrong and cannot form the basis for a serious assessment," an RWE spokesman said. "If plants were not covering their cash costs we would not run them," the spokesman said.
The report also said the Central European energy group EPH, which has assets mainly in Germany and the Czech Republic, could lose €613 million, and PPC in Greece could lose €596 million.
Higher spending on technology is necessary to meet stricter EU air quality standards from 2021. The report also noted rising carbon permit prices could boost spending.
"Policymakers and investors should prepare to phase out coal by 2030 at the latest," Gray added. Several EU countries have already announced plans to remove coal plants completely over time to meet global emissions reduction targets.
Several countries such as Poland still depend on coal for the majority of their power generation.
Some coal plant operators argue coal is here to stay for several decades to come because renewable energy is intermittent and not a stable supplier of energy.