China’s Power Grid Investment Surges in Q1, Driving Industrial Chain Vitality

China’s power grid construction has accelerated at the start of this year, with fixed-asset investment (FAI) by the two major grid companies reaching 167.45 billion yuan in the first quarter, it was learned from State Grid Corporation of China (State Grid) and China Southern Power Grid Co., Ltd. (Southern Power Grid) on April 2.

State Grid recorded a 37% year-on-year increase in FAI, while Southern Power Grid saw a more robust growth of 49.5% during the same period, underscoring the country’s strong momentum in expanding effective investment through key infrastructure projects, which serve as a cornerstone for economic development.

A string of key grid projects have been put into operation or advanced at an accelerated pace since the beginning of the year. On January 30, the 500-kV Ganxiang Power Transmission and Transformation Project was commissioned in Zhaoqing, Guangdong, boosting the region’s new energy transmission capacity by 2 million kilowatts. On March 20, the 220-kV Weizhou Island Cross-Sea Interconnection Project went into service, ending the island’s history of isolated grid operation. Three days later, the 500-kV Machang Power Transmission and Transformation Project in Gui’an New Area, Guizhou, was put into production three months ahead of schedule.

Southern Power Grid has been ramping up its investment progress, with major projects including the Tibet-Guangdong DC Project, Guangzhou Tianhe Tangxia Flexible DC Back-to-Back Project and Yangjiang Sanshan Island Offshore Wind Power Flexible DC Transmission Project under continuous construction. State Grid, meanwhile, has accelerated the construction of power transmission corridors, power interconnection projects and pumped storage power stations.

In the first quarter, several key projects such as the Panxi Ultra-High Voltage (UHV) AC Project and Anhui-Hubei DC Back-to-Back Project broke ground. Construction of the Gansu-Zhejiang, Datong-Huailai-Tianjinnan UHV projects and Fujian-Jiangxi DC Back-to-Back Project was also expedited. A total of 37 pumped storage power stations are under construction, with the total installed capacity of in-operation and under-construction pumped storage stations exceeding 94 million kilowatts.

The multiplier effect of grid investment has been continuously released. Southern Power Grid completed 38.45 billion yuan in FAI in the first quarter, with its total bidding and procurement scale reaching 78.4 billion yuan, a 25% year-on-year increase. It supplied 21.2 billion yuan worth of project materials, up 43% year-on-year, and paid 16.8 billion yuan in material payments, a 41% year-on-year rise.

“Guided by major grid projects, we have effectively driven the capacity upgrading of upstream and downstream enterprises and stimulated the vitality of the power industry supply chain,” said Zhang Li, deputy general manager of the Supply Chain Department of Yunnan Power Grid Company. He cited examples: Nanjing Electric Insulator Co., Ltd. expanded its production lines from 1 furnace with 2 lines to 4 furnaces with 6 lines, tripling its glass insulator production capacity; Chongqing Jiangdian Electric Power Equipment Co., Ltd. added 5,000 square meters of raw material storage space and adopted two-shift production, increasing its capacity by 15%.

State Grid’s investment pull effect was equally remarkable, with over 129 billion yuan in FAI completed in the first quarter, driving more than 250 billion yuan of investment in the upstream and downstream industrial chain. Green development and people’s livelihood have become key keywords in investment direction: State Grid invested over 10 billion yuan in new energy grid connection projects, a year-on-year increase of more than 50%, and 56.8 billion yuan in distribution networks, accounting for 55% of its total grid investment.

According to research reports, Huafu Securities noted that grid investment is in a pattern of internal and external resonance with rising prosperity, frequent UHV project launches and accelerated regional main grid construction. Caixin Securities pointed out that in the first year of the 14th Five-Year Plan period, policy measures and physical investment are exerting joint efforts, suggesting attention to UHV equipment manufacturers, distribution network equipment manufacturers and those with leading export shares in overseas markets.