On February 2, the China Electricity Council (CEC) released the "2025-2026 National Electricity Supply and Demand Situation Analysis and Forecast Report," predicting that China's total electricity consumption will grow by 5% to 6% year-on-year in 2026. It is also projected that by 2026, the installed capacity of solar power will surpass that of coal power for the first time, with the combined installed capacity of wind and solar power reaching half of the total power generation capacity by the end of that year. Experts anticipate that by the end of 2026, the nation's total power generation installed capacity will reach approximately 4.3 billion kilowatts. Within this, non-fossil fuel energy generation capacity will account for 2.7 billion kilowatts, representing about 63% of the total, while the share of coal power capacity is expected to drop to around 31%.
Industry analysis suggests that China's energy structure transformation will continue to accelerate, with the future energy system relying predominantly on clean energy sources like wind and solar power. However, due to the inherent instability of new energy generation, the role of the power grid becomes critically important. Against this backdrop, grid companies have successively announced increases in their fixed asset investment plans. Recently, State Grid Corporation of China declared that its fixed asset investment during the "15th Five-Year Plan" period (2026-2030) is expected to reach 4 trillion yuan, marking a 40% increase compared to the "14th Five-Year Plan" period. Similarly, China Southern Power Grid announced that its fixed asset investment for 2026 will be set at 180 billion yuan, hitting a record high for the fifth consecutive year with an average annual growth rate of 9.5%.
The industry widely expects that China Southern Power Grid's total investment during the "15th Five-Year Plan" period will reach about 1 trillion yuan. Based on this estimate, the combined investment from the two major grid companies over five years will approach 5 trillion yuan, a figure that far exceeds the 2.64 trillion yuan invested during the "13th Five-Year Plan" period and the 2.85 trillion yuan of the "14th Five-Year Plan". On December 31 last year, the National Development and Reform Commission and the National Energy Administration jointly issued the "Guiding Opinions on Promoting High-Quality Development of the Power Grid," requiring that by 2030, a new grid platform will be initially established, featuring backbone and distribution grids as the primary foundation and smart microgrids as a beneficial supplement, forming an organic whole with clear interfaces, complete functions, intelligent operation, and efficient interaction.
By 2035, the development of backbone grids, distribution grids, and smart microgrids is expected to be fully coordinated, with a significantly improved safety management mechanism that runs through all grid levels. The intelligence and digitalization level of grid facilities throughout their life cycle will be markedly enhanced, effectively supporting the safe and stable operation of the new power system and the healthy development of various grid-connected entities, thereby supporting the achievement of national independent contribution goals and providing robust power security for the basic realization of socialist modernization. Zhang Zhigang, Chairman of State Grid, recently stated the need to fully leverage the grid's fundamental supporting role and its effect in driving investment, using greater efforts and more concrete measures to help expand domestic demand and stabilize growth. He emphasized increasing grid investment, adhering to the principle of moderately超前 (advancing) power development, closely aligning with major national strategies, and connecting with the construction of "Two News and Two Heavies" to more effectively drive social investment and the development of the industrial and supply chains.
Analysts believe that power grid projects are characterized by large investment scale, long industrial chains, and strong radiating and driving effects. Accelerating the construction of major grid projects can fully exert this driving effect, vigorously promoting investment growth, industrial development, and improvements in people's livelihoods. Furthermore, increasing grid investment is also necessary to cope with the country's growing electricity demand, adapt to the construction of the new power system, match the continuously新增 (newly added) installed capacity of new energy power, and serve as a crucial measure to address the issue of new energy consumption. Analysis institutions posit that the nearly 5 trillion yuan investment from the two major grid companies will create a ripple effect across the entire industry chain, with five major sectors—ultra-high voltage (UHV), main grid equipment, and distribution network upgrades—directly benefiting.
Citic Securities stated that grid construction during the "15th Five-Year Plan" period is expected to focus on the main themes of interconnection/mutual support and digitalization/intelligence. Areas such as UHV, DC power transmission, and digitalized smart microgrids are anticipated to remain high-growth focal points for investment. They specifically recommend two directions: 1) Leading domestic power equipment enterprises closely related to the景气度 (prosperity) of domestic grid investment and major projects like UHV and flexible DC transmission; and 2) Leading enterprises that benefit from major domestic construction investments while also catering to high overseas demand or emerging sector needs like AI.
Related concept stocks: TIMES ELECTRIC (03898): The company has been deeply involved in the power transmission and distribution field for nearly 20 years, having served over 40 domestic and international UHV DC and flexible DC transmission projects, including Wudongde, Hami-Zhengzhou, and Brazil's Belo Monte, accumulating rich practical project experience. Currently, the company holds a market share of around 50% in the domestic transmission and distribution sector. It boasts a diverse product portfolio capable of providing complete solutions and will continue to develop products with larger capacity, higher power density, and greater reliability based on future demands from the grid and energy application sectors. HUADIAN POWER (01071): The company's wholly-owned subsidiary, Huadian Longkou Power Generation Co., Ltd., recently successfully completed the 168-hour full-load trial operation of the second unit in the fourth-phase 2×660 MW cogeneration project of Huadian Longkou, officially commencing commercial operation. This marks the full completion and operation of both 660 MW ultra-supercritical units in the Huadian Longkou fourth-phase project, injecting new momentum into regional energy security and green, low-carbon development.
CHINA POWER (02380): A subsidiary of the company, China Power (Pu'an) New Energy Co., Ltd., is developing a wind-solar-thermal-storage integrated demonstration project with a planned installed capacity of 1,000 MW. This project encompasses 700 MW of photovoltaic power generation, 300 MW of wind power generation, and energy storage facilities at different stages. Located in Guizhou Province, China, the project utilizes centralized control and intelligent dispatch to achieve 24-hour monitoring of all station equipment operations and deeply integrates advanced models like smart power station construction concepts, ensuring optimal, safe, and efficient project operation. This project is not only a key initiative in Guizhou Province's "14th Five-Year Plan" for power development but also a typical example of innovative and optimized energy structure transformation within the China Southern Power Grid region.
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