China's State Grid investment increased 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.

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 2nd, the China Electricity Council officially released the “Analysis and Forecast Report on the National Power Supply and Demand Situation for 2025-2026,” which shows that in 2025, the total investment in nationwide power grid construction will reach 639.5 billion yuan, a year-on-year increase of 5.1%.

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

“In recent years, the construction of large-scale wind and solar bases has driven rapid growth in investment in ultra-high-voltage direct current transmission projects. In 2025, direct current project investment will increase by 25.7% year-on-year; alternating current project investment will grow by 4.7% year-on-year.”

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

In recent years, China has made significant progress in emerging infrastructure fields such as big data, cloud computing, artificial intelligence, 5G networks, and industrial internet, greatly promoting electricity consumption in related industries. For example, electricity used for internet data services has grown an average of 35.9% annually from 2021 to 2025.

Ultra-high-voltage and Distribution Network Dual-Drive

One of the core objectives of this large-scale investment is the expansion of China’s UHV (Ultra-High Voltage) power grid.

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

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

These investments aim to address the absorption of distributed energy sources, with plans to integrate approximately 900 gigawatts of small, decentralized power generation facilities, thereby enhancing the grid’s capacity to accommodate clean energy and improving overall system flexibility.

AI-Driven New Project Approvals

Currently, China has 45 UHV lines in operation. With the rapid development of artificial intelligence technology, new growth points in power demand are emerging.

According to analysis by Galaxy Securities Co., policymakers may accelerate approval processes this year to meet the increased power demand driven by AI, with an expected addition of 7 to 9 such projects.

This expansion trend has already had a positive impact on the domestic industry chain. Against the backdrop of a global shortage of large transformers, Chinese domestic power equipment manufacturers are benefiting from the continued advancement of domestic grid construction.

Meanwhile, China’s two major state-owned grid operators—State Grid Corporation of China and China Southern Power Grid—have been steadily increasing capital expenditure in recent years. The combined budget of these two companies is expected to approach 1 trillion yuan this year, with plans to maintain growth until 2030.

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