Ai ...China dominance... Energy!

[QP!]

As many have predicted China is beginning to flood the market with MUCH cheaper AI models that are being adopted in Silicon Valley and across the US.

The performance of all the current models is comparable but China's models cost multiples less to utilize and this may pose a real challenge to US AI companies if users begin choosing based on cost.

The key to China offering cheap AI is their energy sector and MASS INVESTMENTS in renewables.

China looks 'uniquely' strong on AI energy, HSBC says​

The supply of power, rather than availability of semiconductors, accounted for the biggest bottleneck in data centre capacity


“China has put themselves in a very unique position in terms of the energy requirement to fuel their economy and ultimately their AI architecture,” Wentzel said in an interview.

The vast build-out of clean energy in China — the country is on track to once again break its own record in installing renewable power this year — “enhances their cost of capital,” ...

.......................

China gives tech firms cheaper power to speed up local AI chip growth​

---------------

China’s New AI Strategy Explained​

China’s National Development and Reform Commission and the National Energy Administration jointly released a statement in early October announcing plans to accelerate the integration of AI into the energy sector. With a goal of widespread application by 2027, China’s new AI strategy aims to secure itself as the global leader in AI applications in energy by 2030.

---------------

OpenAI warns White House of China’s energy dominance​

China brought 429 GW online last year while the U.S. added just 51 GW, an OpenAI official told the White House.

------------

 

[QP!]

Inb4 @T. A. Gardner says 'ignore all these analysts as i alone can tell you that China's investments in Green Energy that are substantially lower their costs per KWH will eventually fail.

inb4 @Hawkeye10 spins some china BS.

 

[T. A. Gardner]

Inb4 @T. A. Gardner says 'ignore all these analysts as i alone can tell you that China's investments in Green Energy that are substantially lower their costs per KWH will eventually fail.

inb4 @Hawkeye10 spins some china BS.

Show me actual evidence that huge "investments in Green Energy" will lower the cost per KWH. Don't cite promises or future predictions. Show me how that has happened anywhere on the planet. It's not like "Green Energy" hasn't been around for a while, it has. Where has it substantially lowered energy costs?

 

[QP!]

Show me actual evidence that huge "investments in Green Energy" will lower the cost per KWH. Don't cite promises or future predictions. Show me how that has happened anywhere on the planet. It's not like "Green Energy" hasn't been around for a while, it has. Where has it substantially lowered energy costs?

...

These factors are driving electricity prices down​

Overall, the main factors driving China's electricity prices further downward are crystal clear: the most important is the extremely rapid expansion of renewable energy sources. Once solar panels and wind turbines have paid for themselves, this electricity can be generated very cheaply. Additionally, China is heavily investing in storage capacity and the expansion of power lines to improve the integration of green electricity into the grid....


---------------

Faster, broader, deeper: China’s energy transition is transforming global energy realities​

...China has embarked on this transition for a variety of reasons. Interviews with experts conducted for this report reveal that within China there is a realisation that the old development paradigm centred on fossil fuels has run its course, and is not fit for 21st century realities. The government’s aim to establish an ‘ecological civilisation,’ which simultaneously delivers on economic, social and environmental goals, is the response, embedded in the Constitution since 2018.

The clean energy transition is constraining China’s dependence on imported fossil fuels, reducing energy costs, stimulating growth and jobs and creating export markets. In 2024, investment and production in clean energy contributed 13.6 trillion RMB ($1.9 trillion) to the national economy – a sum equivalent to about one-tenth of China’s GDP, or the total GDP of Australia – and the sector is growing three times faster than the Chinese economy overall...

 

[QP!]

Show me actual evidence that huge "investments in Green Energy" will lower the cost per KWH. Don't cite promises or future predictions. Show me how that has happened anywhere on the planet. It's not like "Green Energy" hasn't been around for a while, it has. Where has it substantially lowered energy costs?

AI Summary:

Multiple recent studies and major energy agencies find that China’s huge build-out and manufacturing scale have driven down the levelized cost of renewable electricity (¢/kWh) enough that new wind and solar projects in many places are now cheaper than new fossil-fuel plants. MDPI+4irena.org+4IEA+4


Below I summarize the evidence, give concrete numbers, and explain the limits.

What the studies & agencies actually show​

• Clear LCOE declines driven by China. IRENA and other agency reports show China was a primary driver of global cost declines for utility solar PV and onshore wind — and in China the weighted average LCOE of newly commissioned projects fell appreciably (example: ~USD 0.072/kWh → ~USD 0.056/kWh for new projects between 2023–24 in IRENA’s dataset). That drop is explicitly attributed to scale, improved integration and supply-chain effects. irena.org+1
• Renewables already cheaper than new fossil generation in many markets. IRENA (and corroborating market reports) find the global median cost for new onshore wind and utility PV is well below the cost of new coal or gas plants in most regions (IRENA: onshore wind ~$0.034/kWh, solar PV ~$0.043/kWh for many new projects in 2024). BloombergNEF and Reuters reporting likewise tie falling prices to China’s overcapacity in manufacturing, which pushed module, inverter and pack prices down. irena.org+1
• Industry-level analyses reach the same conclusion. Independent LCOE studies (e.g., Lazard’s LCOE+) show that, when you compare levelized costs, wind and solar plus storage are increasingly competitive with new fossil plants in many regions — and that cost-competitiveness is reinforced by low manufacturing cost baselines, many of which originate in China’s supply chain. https://lazard.com

How China’s investments translate into lower kWh​

• Manufacturing scale & learning curve. China’s enormous manufacturing capacity for PV, wind components and batteries lowered component costs worldwide, reducing capital expenditure (capex) per MW and therefore LCOE. IEA and IRENA both note China’s outsized role in global added capacity and cost declines. IEA+1
• Deployment experience & lower project costs. Rapid domestic deployment in China improved construction, permitting, installation efficiency and local supply chains — pushing down “overnight” project costs, another major LCOE driver. irena.org
• Battery and storage cost falls. China-led declines in battery pack costs (and supply chains) reduce the system cost of integrating variable renewables, lowering effective delivered cost per kWh when storage is included. Recent market analyses discuss pack-price drops and storage LCOE effects. Ember Energy

​

Bottom line / practical answer​

• multiple peer-reviewed analyses and authoritative agency reports conclude that China’s massive renewables investments and manufacturing scale have substantially reduced the LCOE (¢/kWh) of wind and solar — often making new renewable projects cheaper than new fossil plants. IRENA, IEA and major market reports document this and quantify the falls. irena.org+2IEA+2

 

[QP!]

InB4 Terry hand waves the extensive AI summary with full citations to research and studies.

 

[T. A. Gardner]

...

These factors are driving electricity prices down​

Overall, the main factors driving China's electricity prices further downward are crystal clear: the most important is the extremely rapid expansion of renewable energy sources. Once solar panels and wind turbines have paid for themselves, this electricity can be generated very cheaply. Additionally, China is heavily investing in storage capacity and the expansion of power lines to improve the integration of green electricity into the grid....


---------------

Faster, broader, deeper: China’s energy transition is transforming global energy realities​

...China has embarked on this transition for a variety of reasons. Interviews with experts conducted for this report reveal that within China there is a realisation that the old development paradigm centred on fossil fuels has run its course, and is not fit for 21st century realities. The government’s aim to establish an ‘ecological civilisation,’ which simultaneously delivers on economic, social and environmental goals, is the response, embedded in the Constitution since 2018.

The clean energy transition is constraining China’s dependence on imported fossil fuels, reducing energy costs, stimulating growth and jobs and creating export markets. In 2024, investment and production in clean energy contributed 13.6 trillion RMB ($1.9 trillion) to the national economy – a sum equivalent to about one-tenth of China’s GDP, or the total GDP of Australia – and the sector is growing three times faster than the Chinese economy overall...

Neither of those articles shows that Chinese energy pricing--in reality--is going down. They blather about "green energy" in China and China's heavy investment in it.

What it misses, as do almost all such analyses, is that the LCOE doesn't reflect the cost of that energy in the total distribution system. That is, it looks only at the cost of installing the generating source, then its operating costs, and the amount of power it produces over its lifetime. There are some variations on this, but none look at the system of distribution or system load.

Levelized Cost of Energy (LCOE)

The levelized cost of energy (LCOE), also referred to as the levelized cost of electricity, is used to assess and compare alternative methods of energy production.

corporatefinanceinstitute.com

That's where wind and solar totally fail. Neither can reliably generate electricity on demand. They are intermittent and dependent on the vagaries of the weather. As such they can't be relied on for base loading without adding massively expensive--and unnecessary with reliable generation systems like coal, natural gas, or nuclear--storage systems and a "smart grid."

 

[QP!]

Neither of those articles shows that Chinese energy pricing--in reality--is going down. They blather about "green energy" in China and China's heavy investment in it.

Full pdf studies linked in AI summary

 

[T. A. Gardner]

Full pdf studies linked in AI summary

Okay, it goes over the same ground. The LCOE from solar and wind are falling and close to a maximum low. That doesn't change the fact that the LCOE is nearly meaningless in the overall system. The paper argues that storage has fallen 93% to $193 USD per kwh for batteries. Storage is not needed for reliable sources of generation unlike solar and wind that are unreliable and not predictable.

Even at $200 (rounding) per kwh for batteries, storage is on the scale needed unaffordable and always will be.

Here's the example: Typically, a solar array has around a 25% capacity factor. To make this system reliably produce 1 kw-day (24 hours) of power you need 5 or 6 kwh of installed solar panels. You then need about 16 to 20 kwh of installed batteries. The paper lists, at one point, the LCOE per kwh for solar at $0.33. To get one kw-day of power this means you are looking at a cost of

$1.65 in solar panels and roughly $0.10 in batteries. That means the cost per kwh to reliably get a kw-day of power out of your solar array has an actual LCOE of $1.75. Now solar is completely unaffordable and unrealistic as a power source. This is why the cost of electricity in every nation that has gone all-in on solar and wind has seen their cost of electricity double or triple. Even California is experiencing this. Right now, California's price per kwh is roughly double that of other states. California can't afford the kind of storage they need, so they pay--PAY--other states like Arizona and Nevada to take their excess solar generation when that occurs, and it frequently does.

They don't get that cost back when they're short as those same other states don't usually have spare capacity online to cover California's shortages. This means California is forced to the spot market and paying higher costs for electricity again.

 

[Hawkeye10]

Why does anyone think the Chinese are focused on energy prices?

Their focus is:

1) Winning at all new tech to include AI to prove the superiority of China

2) Never again having energy shortages like they did a few years ago....this is a promise from the party to people

3) Insulating themselves from Western aggression to include in energy

4) Making sure that they have tons of electricity, in contrast to the West which has put ourselves on an energy diet


Do note that America is losing at AI for several reasons, one of which is the lack of enough electricity, and lack of a stable grid.....problems China does not have.

 

[Hawkeye10]

Maybe two weeks ago I saw the Microsoft CEO saying that he is not concerned about having enough chips to build out AI....he is concerned about having enough dependable electricity. Where I am residential electricity prices are going up 10% a year, in large part to build intermittent energy production for AI....this is happening all across America.