Fossil Reckoning: Valuation of Coal and Gas Stranded Assets in Thailand

This research aims to evaluate the financial impact of Thailand’s transition to clean energy focusing on the potential stranded asset values within the gas and coal powerplant industry. Employing the Discounted Cash Flow (DCF) methodology, our analysis encompasses three scenarios: (1) Base Case or Power Development Plan 2018 Revision 1, (2) Rapid Transformation, and (3) 100% Renewable. Our findings indicate that Thailand is at a considerable risk of encountering stranded assets in the future, with projected values reaching up to 360 billion baht in the Rapid Transformation scenario and escalating to 530 billion baht under the 100% Renewable scenario. Such outcomes highlight the significant financial risks faced by shareholders and bondholders in fossil fuel-dependent power companies. Importantly, our study underscores the critical need for investments in renewable energy. This strategic change not only aligns with the global initiative to address climate change but also plays a pivotal role in mitigating the transition risks associated with the energy sector’s evolution.