More than 800 coal power stations in emerging economies show potential to be profitably replaced by renewable energy, providing significant returns for investors and slashing emissions.

New modelling from the Institute for Energy Economics and Financial Analysis (IEEFA) finds that it is economically viable to use large-scale investment in renewables coupled with restructured power purchase agreements (PPAs) to replace these coal assets through transactions that cover all costs associated with their transition to renewables. The research focuses on seven examples.

“There is a solid business case for ageing coal power plants to be replaced with large-scale solar and storage systems, transforming the energy landscape and economic potential of emerging markets,” said Paul Jacobson, an IEEFA guest contributor and author of the report. “Such programmes can accelerate the shutdown of emerging economies’ dirtiest power generation assets by more than 10 years while providing the basis to attract substantial foreign direct investment and create significant new employment opportunities.”

The model proposed by the research sees renewables built and phased in to coincide with a gradual ramp-down and closure of coal generation capacity. The transaction works because significant earnings from renewables PPAs are guaranteed for 20-30 years.