Canada has launched a strategic initiative to double its electricity generation capacity by 2050. This plan includes adjustments to clean electricity regulations to enhance the operational flexibility of natural gas power generation. The total cost for expanding the national grid is projected to exceed one trillion Canadian dollars, with funding shared among the federal government, provincial authorities, and the private sector. The strategy aims to reduce energy costs for approximately 70% of Canadian households and pledges financial support, including loans and grants, for energy retrofits in up to one million homes. As part of this effort, the Canadian government plans to amend clean electricity regulations, permitting greater use of credible carbon offset mechanisms and allowing existing natural gas power units more operational leeway to maintain grid stability and power supply reliability.
A report by Wood Mackenzie released on Tuesday indicates that U.S. spending on power generation equipment for data centers could reach $65 billion by 2030, a significant increase from $2.6 billion last year. This rapidly growing sector is expected to capture the largest share of the total power generation equipment market. During the same period, the total capacity of U.S. data centers is forecast to reach 110 gigawatts, with total spending on power plant equipment potentially climbing to $215 billion.
Developed nations like the United States and Canada commonly face challenges such as aging grid infrastructure and hollowed-out domestic manufacturing capacity. Currently, the lead times for core power equipment in North America are extremely long, with some exceeding 120 weeks, and prices are high. In contrast, China's power equipment supply chain is highly comprehensive, covering everything from upstream raw materials to equipment manufacturing. In areas like ultra-high voltage transmission and smart distribution, Chinese companies not only possess globally competitive or leading technology but also offer equipment with superior cost-performance ratios and significantly shorter delivery cycles compared to their Western counterparts. GF Securities believes that leading Chinese power equipment manufacturers will substantially benefit from the high growth in overseas demand.
Relevant Hong Kong-listed power equipment companies include: DONGFANG ELEC (01072): On April 30, the company formally signed an agreement with a North American client at its Dongfang Turbine Works for the overseas deployment of its independently developed gas turbines. The initial phase of the project involves 10 units of the 50MW G50 self-developed gas turbines. To support this strategic opportunity, the company's board has approved a project to enhance the core production capacity for these turbines at Dongfang Turbine. Annual production capacity for 20-30 units is expected to be established by early 2028.
WASION HOLDINGS (03393): Recent company announcements disclosed that it secured contracts worth a cumulative total of approximately RMB 383 million from the State Grid's centralized tenders within 2026. Citigroup previously initiated a 90-day positive catalyst watch on WASION HOLDINGS. The catalysts include: 1) expectations for strong profit growth in its distribution business and overseas smart meter sales from 2026 to 2027; 2) WASION's in-house capability to manufacture meter relays, a key component whose price surged 2 to 4 times in 2026, which could help mitigate potential profit pressure in its grid smart meter business; and 3) attractive current valuations, with a forward P/E ratio of 16.4x, P/B ratio of 3.2x, and a dividend yield of 2.4% for 2026.
WEICHAI POWER (02338): Goldman Sachs views WEICHAI as transitioning from a traditional leader in heavy-duty truck engines to the AI data center power generation business. A recent Goldman Sachs research report noted that global backup power leader Generac (GNRC) reported better-than-expected Q1 2026 results, with positive implications for its key partner WEICHAI POWER (via its Baudouin brand large-bore diesel engines). Generac's data center order backlog increased from $400 million at the end of 2025 to approximately $700 million by the end of Q1 2026. The company anticipates releasing "significant volume" of orders in the coming quarters as two major hyperscale data center customers complete their formal Approved Vendor List (AVL) certification processes.
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