Abstract
Retiring coal plants as part of a decarbonization strategy has started to become a reality in the last five years and is reflected in the least-cost plans of many countries. However, major issues go beyond the scope of such planning, including commercial contracts, markets and asset stranding. This paper proposes a new model formulation that endogenously calculates stranded assets taking into consideration commercial and market issues. It can be used to develop insights into economic and financial issues surrounding stranded costs of coal retirement. An illustrative example around the existing 209 GW coal fleet, including an aging part of the coal fleet of 100 GW, in India is used to show how the model can be implemented with relative ease. A second case study is constructed for the Philippines, which has a much younger and uniform coal fleet. Comparing and contrasting the two case studies is valuable for understanding the critical drivers of stranded costs.
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