China's power grid investment rose by 5.1% last year to a record high of 639.5 billion yuan; this year, solar power generation will surpass coal power for the first time.

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China's power grid investment reached a record high in the past year and is expected to continue steady growth in the coming years.

On February 2, the China Electricity Council officially released the "2025-2026 National Power Supply and Demand Situation Analysis and Forecast Report," showing that in 2025, investment completed in national power grid construction will reach 639.5 billion yuan, a year-on-year increase of 5.1%.

Hou Wenjie, Director of the Statistics and Digital Intelligence Department of the China Electricity Council, stated,

"In recent years, the construction of large wind and solar power bases has driven rapid growth in investment in UHV DC transmission channel projects, with DC project investment increasing by 25.7% year-on-year in 2025; AC project investment will see a year-on-year increase of 4.7%."

According to Xinhua News Agency, on the power supply side, in 2026, installed solar power capacity will exceed coal power capacity for the first time, and by the end of the year, wind and solar installed capacity combined will account for half of total power generation capacity.

In recent years, China has made significant progress in the construction of new infrastructure such as big data, cloud computing, artificial intelligence, 5G networks, and the industrial internet, greatly promoting electricity consumption in related sectors. For example, electricity consumption by internet data services had an average annual growth rate of 35.9% from 2021 to 2025.

Dual Engines of UHV and Distribution Networks

One of the core objectives of this large-scale investment is the expansion of China's ultra-high voltage (UHV) power grid.

As an important part of the “West-to-East Power Transmission” strategy, this plan aims to transmit abundant energy from the west to the eastern load centers via UHV lines. By 2030, the UHV grid is expected to connect over 420 GW of power capacity.

In addition to backbone grid construction, funds will also flow to so-called smart microgrids and distribution networks.

These investments aim to address the integration of distributed energy, planning to consolidate about 900 GW of small and distributed power facilities, thereby enhancing the grid’s ability to absorb clean energy and the overall flexibility of the system.

AI Demand Driving New Project Approvals

Currently, China has 45 UHV lines in operation. With the rapid development of artificial intelligence technology, electricity demand is showing new growth points.

According to brokerage firm Galaxy Securities Co., policymakers may accelerate the approval process this year to meet AI-driven power demand growth, with an estimated 7 to 9 such new projects to be approved.

This expansion trend has already had a positive impact on domestic industry chains. Against the backdrop of a global shortage of large transformers, China’s domestic power equipment manufacturers are benefiting from the ongoing construction of the domestic power grid.

China’s two dominant state-owned grid operators—State Grid Corporation of China and China Southern Power Grid Co., Ltd.—have continued to increase capital expenditures in recent years. The combined budgets of the two companies are expected to approach 1 trillion yuan this year and plan to maintain growth before 2030.

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