The price of solar energy & wind turbines is falling all over the world. There was an article recently in the New York Times which showed the role of China in all of this. The main point is that China is a world leader when it comes to the manufacture of solar panels & wind turbines. This is why it can easily achieve economies of scale and is also able to offer products at a low market price.

There are 2 consquences of this:

1. The installation of renewable sources of energy will become cheaper.
2. Competitors manufacturing in different countries around the world have problems in competing with the Chinese manufacturers.

How did China reach this position? The articles in the New Your Times said the following:

“The biggest advantage that China has over all other countries in the world is that their demand for electricity is consistently rising by 15% every year. In U.S., power companies usually have to choose between purchasing equipment for renewable energy or to continue using their fossil fuel powered plants which are already built. In China, these companies need to buy lots of equipment and the alternative sources of energy like nuclear & wind are priced very competitively.” Or, in the U.S. and in Europe, various renewable energies are having to compete with the existing power supply whereas in China they do not have to. There is more than enough space for the rapid expansion of renewable energy as well as for coal power plants. The unlimited demand needes the expansion to be across the board. Another reason for the low price is the low cost of labor in China.

You also should consider the consequences from the other side too. If saturated economies choose to phase out the conventional power plants (nuclear and coal) fast then there is definitely going to be room for local economies of scale in renewable energy too. But, these decsions could only be made by the government as manufactureres that have the ability to invest massively in renewable energy supply currently own coal plants.

The debate on whether nuclear power affects the climate or not is an open one with no conclusion yet. But the Chinese economies of scale do give us evidence that there is a quantitative indication which is in facor of phasing out all the conventional plans for producing energy very quickly.