Prospects dimfor Asia's coal power companies on slowing power demand and growing greenalternatives.

Coal power generation in Asia will decline ifannual growth in power demand slows to below 2–3 per cent on average in theregion over the next 10 years.

Advances in disruptive technologies for renewableenergy will increase the risk that coal power's dispatch volume will decline.

Asia’s slowingenergy demand growth will impact coal power producers the hardest asgovernments tighten environmental standards and introduce policies that favourrenewable energy, according to a new report by Moody's Investors Service. “Forcoal power producers, tariff schemes to compensate for lower dispatch volumesor strategies to diversify their energy mix away from coal power areincreasingly important,” says Mic Kang, a Moody's Vice President and SeniorCredit Officer.

Coal-fired powerproducers are also facing increasing competition from their renewable energycounterparts, which have made technological advances to improve efficiency andcosts. If the levelized cost of energy for new wind and solar power plants – bothwith battery storage – in China and India declines annually by a high singledigit to mid-teen percentage from H1 2020 to 2025-30, these alternatives willlikely be just as cost competitive as coal power by 2025-30.

Additionally,financing capacity for Asia's coal power producers will continue to fall asfunding markets for debt issuers become greener and investors lose appetite forcoal power assets amid volume risk and uncertainty over the recovery of demand.But, most rated coal power producers, particularly state-owned ones, should be ableto withstand the pressure in the foreseeable future, the report notes.