Just looking around the world at what is happening in the energy business, and one would suspect it is a really dumb idea for Japan to be investing a massive amount in adding a lot of coal-fired electricity generation over the coming years. But it is nice to find that a world class university research institute -- Oxford's Smith School of Enterprise and the Environment -- has done the detailed work to try and quantify just how dumb it is, and what is likely to happen to Japan's existing coal-fired generation in coming years.
The headline: over the next 5~15 years, stranded coal assets are predicted to be 6.8 to 8.9 trillion yen, or US$61.6 billion to US$80.2 billion.
You can download a copy of the 100+ page study here. It goes into detail looking at 5 different Japanese utilities and identifying risks at specific generating plants. Much more granular than anything one would see in Japan on this topic!
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NOTE: To be clear, this study does not predict exactly WHEN coal generation assets become stranded in Japan. That will depend upon (1) implementation of wholesale competition, (2) carbon tax or equivalent to reflect the externalities of operating these plants, (3) cost of LNG, (4) success in restarting nuclear plants, and (5) speed of introduction of renewables. Most of the utilities will do everything they can to slow down this process. Of course, if they slow things too much, consumers will self-generate and the grid will go into a negative spiral of reduced consumption and higher per kWh costs.
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