AVIC Securities: Global power grid investments are expected to enter an upturn cycle, and domestic power grid equipment manufacturers are also迎来 export opportunities

Caitong Finance APP has learned that AVIC Securities released a research report stating that to achieve energy security, cost reduction, and green transformation, global power grid investments are expected to enter an upcycle. China’s State Grid Corporation has proposed a 4 trillion yuan investment during the 14th Five-Year Plan, a 40% increase compared to the 14th Five-Year Plan. Europe has introduced a comprehensive power grid plan, expected to mobilize 1.2 trillion euros in grid investment. The US’s three major grids have launched a total of $75 billion in upgrades and transformations for transmission and distribution. Global AI investments are booming and are expected to drive a hundred-billion-dollar market over the next five years. The global power grid renovation directions include ultra-high voltage and main network upgrades, digitalization of distribution networks, as well as microgrids, virtual power plants, and off-grid power use. The power grid equipment industry benefits significantly from the global investment boom, and domestic manufacturers are also seizing opportunities to expand overseas.

AVIC Securities’s main points are as follows:

Domestic Ultra-High Voltage and Main Network Transmission and Transformation

During the 14th Five-Year Plan, domestic ultra-high voltage construction investments exceeded 380 billion yuan, but progress has been slower than expected. Meanwhile, domestic wind and solar installations are rapidly increasing, with total capacity surpassing thermal power in Q1 2025. The scale and proportion of wind and solar power online are growing quickly. Ultra-high voltage is a key hub for cross-regional transmission, addressing regional imbalances in power generation and consumption, and is expected to see increased investment during the 15th Five-Year Plan. The growing pressure to absorb renewable energy adds stress to grid stability, prompting greater main network upgrades. Higher voltage levels concentrate device value in fewer categories, with market share increasingly held by leading manufacturers. Leading companies are expected to benefit from increased investment in transmission and transformation, with key players including State Power Investment Corporation NARI, Siyuan Electric, TBEA, China Western Electric, and others.

Domestic Digitalized Distribution Network Upgrades, Microgrids, and Virtual Power Plants

Distribution networks act as the “capillaries” connecting the main grid and end-users. Large-scale deployment of distributed energy resources and the electrification trend of terminals like electric vehicles create demand for digital upgrades of distribution networks. Policies promoting green electricity direct supply, market-based trading, and standardized management of green power certificates lay the foundation for business models such as microgrids and virtual power plants that match distributed energy supply with end-user demand. “Electricity and computing collaboration” has become a national-level new infrastructure strategy, bringing new opportunities for electric power and computing synergy, while also posing new challenges for smart grid dispatch and power trading. The scale of distribution network upgrades is substantial, accounting for over 60% of State Grid’s investment during the 14th Five-Year Plan. However, the regional grids, equipment, and materials involved are diverse, leading to a more fragmented market landscape. State Grid is promoting regional joint procurement models to improve the efficiency of bidding and procurement in distribution equipment, with leading firms expected to maintain relatively stable market positions. Key companies include Dongfang Electronic, Southern Power Grid Digital, and Southern Power Grid Energy.

Power Supply Systems Related to AIDC

Global cloud providers’ AI capital expenditures remain strong, directly boosting demand for power supply systems in AI infrastructure. According to IEA forecasts, from 2025 to 2030, global AIDC (AI Data Center) installations will cumulatively add 129 GW, a 133% increase, with electricity consumption increasing by 530 TWh, a 127.4% rise. Power supply systems account for about 10% of total AIDC investment. Based on IEA predictions, the global annual market size over the next five years could exceed 100 billion yuan. As chip power increases, power supply solutions are expected to evolve and optimize, with a rising share of high-voltage direct current (HVDC) power supplies, boosting demand for Panama power supplies and SST power supplies. Key companies include Sifang Co., Ltd., Jinpan Technology, and Zhongheng Electric.

Domestic Power Grid Equipment Manufacturers’ Overseas Opportunities

Rising global power grid investments will directly drive demand for grid equipment. Domestic power grid equipment industry chains have advantages in covering all voltage levels, integrating upstream and downstream industries, and competing or leading in technology. Compared to foreign counterparts, domestic equipment offers better cost performance. Leading firms are actively expanding overseas, obtaining certifications in the US, Europe, and other regions. In recent years, exports of power transformers, cables, and meters have reached new highs. Key companies include Igor, Shuangjie Electric, and Huaming Equipment.

Risk Warnings:
Global power grid investments may fall short of expectations; raw material prices may surge or supply may be tight; geopolitical conflicts could impact supply chains and global logistics; global AI data center capital expenditures may underperform or decline; and exchange rate fluctuations could be significant.