Why China can't make the big leap to non-coal power sources just yet

Other renewable sources have a lot of hurdles to take.

According to CLSA, China's power market will not be immune from the global disruption caused by solar and energy storage. As with most things, its movements have an outsized impact on global markets simply due to the country's size.

Even though China is the world's top destination for both solar panels and wind turbines, the impact of intermittent renewables on the power sector as a whole has thus far been small. The report, titled "China Cleantech," said coal-fired power in China is cheap. Network charges are low. Grid power is reasonably accessible and reliable for all.

Here's more from the sector outlook:

At the same time, there are hurdles for renewables. The areas consuming the most power within China are neither particularly sunny nor particularly windy, making wind and solar relatively expensive compared to windy Iowa or sunny Australia.

Space is also relatively constrained in urban areas, with people living mostly in apartment blocks without enough rooftop space to supply solar to most inhabitants.

Nevertheless, the disruption is coming.

Like most markets, China's solar demand is dependent upon subsidies today and will remain so for the next couple years. Ultimately, if the economics do not work out, however, ti will be a dead market.

If the economics do work, then policy changes will only be road bumps (albeit potentially very big) rather than catastrophic.

Depending on pollution charges, wholesale solar could compete with coal as early as 2020. While much uncertainty remains there, distributed solar is already closing on grid parity for commercial enterprises along the coast and will be a superior alternative for most of the country by 2020.