China Merchants Securities has released a research report indicating that the United States has recently initiated the construction of 765kV ultra-high-voltage transmission lines. This expansion plan is designed to alleviate congestion in existing infrastructure, integrate new power generation resources into the grid, and enhance grid reliability and long-term system stability. Beyond the established high-voltage electrical equipment groups in the U.S. and Europe, demand may spill over to high-voltage/ultra-high-voltage companies in Japan, South Korea, and China. However, the certification cycle for overseas high-voltage electrical equipment is longer, typically spanning 5 to 10 years. Companies that have already completed their product layouts and possess a strong reputation are expected to seize these opportunities. The main viewpoints of China Merchants Securities are as follows:
The United States has commenced the construction of 765kV ultra-high-voltage lines to improve grid reliability and long-term system stability. The 765kV level represents the highest transmission voltage in the U.S., with primary lines located mainly within the Eastern Interconnection grid, spanning only about 2,000 miles. Since the end of 2025, grid operators in Texas, the Mid-Atlantic, and the Midwest have successively received approvals for transmission expansion projects totaling approximately $75 billion, with 765kV lines being a key focus. These are projected to expand to about 10,000 miles. The expansion aims to relieve congestion in existing infrastructure, incorporate new generation resources into the grid, and bolster reliability and stability.
Competitive bidding and other models are being introduced to accelerate grid construction. Against the backdrop of AI data center development and manufacturing reshoring, growing electricity demand conflicts with aging grid infrastructure and insufficient transmission capacity, leading to increasingly severe power shortages and potentially driving up residential electricity prices. Technology companies are being required to address their data centers' power needs independently, either through purchasing or building their own generation and transmission facilities. System operators are encouraged to optimize auction frameworks and introduce competitive bidding models to shorten the timeline for line expansions.
China's high-voltage power transmission and transformation equipment industry may have certain opportunities. The U.S. power system is entering a new investment cycle, the first since the 1970s, compounded by rising electricity demand from the AI industry, making it difficult to complete grid upgrades within a few years. Currently, lead times for high-voltage transformers from overseas grid equipment manufacturers extend as far as 2030, and supplies of high-voltage switchgear and insulation are expected to tighten further. Ultra-high-voltage capacity at the 765kV level is particularly scarce. In addition to existing high-voltage equipment groups in the U.S. and Europe, demand could spill over to high-voltage/ultra-high-voltage firms in Japan, South Korea, and China. Nevertheless, the certification process for overseas high-voltage equipment is protracted, often taking over 5 to 10 years. Companies with established product portfolios and solid reputations are well-positioned to capitalize.
Attention should be paid to potential technological routes or upgrades. Beyond the demand and scale of ultra-high-voltage grid construction, possible technological advancements and transformations, such as insulation upgrades, warrant monitoring. In terms of investment targets, companies that have gained a foothold in overseas markets, achieved localized operations in end markets, or are deeply embedded in the supply chains of major international firms are recommended. Suggestions include Siyuan Electric (002028.SZ), Shenma Electric Power (603530.SH), Jinpan International (688676.SH), and Eaglerise Electric (002922.SZ). Other companies to watch include TBEA (600089.SH), China XD Electric (601179.SH), Pinggao Electric (600312.SH), Ankang Smart Electric (300617.SZ), Baiyun Electric (603861.SH), Huaming Equipment (002270.SZ), and Changgao Electric (002452.SZ).
Risks include trade barriers, slower-than-expected overseas business expansion, and intensifying competition.
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