Extract C
Wind turbine manufacturers are investing billions of euros in scaling up offshore wind technology. This investment comes with high risks. Despite national commitments to carbon neutrality and energy security, grid network constraints and fluctuating wholesale electricity prices make future demand highly uncertain. Nonetheless, governments remain committed to subsidising offshore wind projects through Contracts for Difference (CfDs).
If wind power is to compete effectively with fossil-fuel generation without permanent state support, manufacturers must lower unit costs. This requires them to exploit economies of scale, both in the fabrication of massive turbine blades and in the deployment of specialized offshore installation vessels. Securing a stable, long-term pipeline of global projects is critical for manufacturers to achieve these cost reductions.
Historically, developer interest has locked onto subsidy stability. When subsidies were cut back in 2018, investment in new capacity plummeted. However, as global gas prices spiked last year, demand for domestic renewable energy soared, prompting developers to speed up planning applications, only for interest to cool again as global supply-chain costs intensified.
Define the term 'economies of scale' (Extract C, paragraph 2).
156 exam-style questions on AQA A Level Economics 1.4 Production, costs and revenue, covering 1.4.1 Production and productivity, 1.4.2 Specialisation, division of labour and exchange, 1.4.3 The law of diminishing returns and returns to scale (A-level only), 1.4.4 Costs of production, 1.4.5 Economies and diseconomies of scale, 1.4.6 Marginal, average and total revenue, 1.4.7 Profit, and 1.4.8 Technological change (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.