Nearly 50GW of US coal power capacity will be unable to compete with renewables by 2024, according to analysis from US investment giant Morgan Stanley, which advises more than a dozen utilities to prepare to retire coal plants and replace them with cheaper renewables projects.
"We compared the costs of operating each coal plant against our state-by-state forecasts of renewables costs across 13 stocks and identified 47,000MW of coal capacity that will become more expensive than renewables by 2024," Morgan Stanley analysts write in the report.
"We estimate this represents a capex opportunity of $64bn and earnings accretion for the stocks we cover of up to 14 per cent in 2025."
The analysis provides further detail on forecasts contained in Part 1 of the report, published in December last year, in which the research firm said that between 70GW and 190GW of coal-fired generation is "economically at risk" from the deployment of "a second wave of renewables" in the US.
Morgan Stanley highlighted firms such as Ameren Corp, American Electric Power, Duke Energy Copy, and Pinncale West Capital Corp as best-placed to take advantage of the opportunities presented by a second wave of clean energy development that is likely to prove so cost competitive that it can replace coal power at scale, despite continued Republican hostility towards clean energy projects and President Trump's repeated pledges to revive the US coal industry.
Morgan Stanley's conclusions reflect the ongoing trend of rapidly falling renewable energy prices, with renewables already offering the cheapest source of electricity in many parts of the world.
The International Renewable Energy Agency's most recent annual assessment of clean power economics, published in May last year, estimated that over three-quarters of the onshore wind and four-fifths of the solar PV capacity due to be commissioned over the next year would produce power at lower prices than the cheapest new fossil fuel plants - and that global technology costs for renewable energy would continue to drop.
Concomitantly, the global capacity of renewable power is expected to expand by 50 per cent by 2024, adding an additional 1,200GW of power capacity - the equivalent of the installed capacity of the entire US economy - according to analysis from the International Energy Agency. Around 60 per cent of this growth is expected to come from solar alone and a quarter from onshore wind as the cost of the most mature renewable technologies continues to fall.
