Firstly, they can't get cheap debt to pay for it and secondly but related, they see major future liabilities around both carbon and remediation. Remediation costs alone for a coal fired power plant and mine can easily run into tens, if not hundreds of millions of dollars.
Developing economies, such as Southeast Asia, are seeing distributed technologies as a "leap-frog" option to the legacy grid-based, centralised systems. They're familiar with the leapfrogging concept from their experience with telecoms and going straight to a wireless system.
Grid infrastructure is the major cost for power system expansion, especially as electrification moves away from urban centres - which is essential, politically, in Southeast Asia. Micro-grids and distributed generation enable that grid cost to be drastically reduced or even deferred indefinitely. The major issue in these jurisdictions is capacity and capability which tends to hold back new technologies in favour of traditional ones for which they have a better understanding and skill-set.
Will government policy keep up?
Whilst the technology is directly competitive with traditional power and has the preference of investors, governments are struggling to set policy in this rapidly shifting environment. This is creating additional risk perceptions in the markets and, without any lower-risk alternative, investment in this case simply ceases.
The market seems to be moving faster than policy makers and regulators can or want to, and this is, at best, slowing down progress and at worst, halting it completely. We know change is scary but the world needs to move forwards.
Advisian has been working with the energy market actors, policy makers and regulators to facilitate discussion and understanding on the New Energy Future. We recently published the first two chapters in this series – for more please visit: www.advisian.com/newenergyfuture