China is positioning its electrical power industry as one of the central pillars during its 15th Five-Year Plan (2026-30) period, as energy infrastructure is set to become the primary engine for the nation's green transition as well as its burgeoning artificial intelligence economy.

State Grid Corp of China, the world's largest utility, is expected to deploy approximately 4 trillion yuan ($554 billion) in fixed-asset investment during the period.

This represents a 40 percent surge from the previous five-year cycle, marking an unprecedented acceleration in the country's effort to build a new power system capable of supporting high-tech industrial modernization, said the company.

China Southern Power Grid, which serves the country's southern industrial hubs, including Guangdong, Yunnan, Guizhou and Hainan provinces, as well as the Guangxi Zhuang autonomous region, also disclosed a 180 billion yuan budget for 2026 alone.

As Beijing prepares its roadmap for the second half of the decade, the power sector has evolved from a traditional utility into strategic infrastructure, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

"This places the grid at the intersection of energy security and digital sovereignty."

According to State Grid Corp, the investment will focus heavily on ultrahigh voltage (UHV) direct current channels, cross-regional transmission capacity, and a comprehensive digital overhaul of distribution networks.

The goal is twofold — to meet the 2030 target of increasing the share of non-fossil energy in terminal consumption and to solve the bottleneck of green power absorption, it said.

"The power industry is now the core sector for strategic infrastructure because it is the only way to bridge the gap between carbon neutrality and the digital revolution," said Lin.

"Without a massive grid upgrade, neither the green transition nor the AI boom can move forward."

A defining characteristic of the"15th Five-Year Plan" framework is the "cross-demand" between the grid and the explosive growth of AI data centers. The computational power required for generative AI has led to a vertical spike in electricity consumption, placing immense pressure on grid stability.

According to forecasts by the International Energy Agency, global data center electricity consumption is projected to more than double by 2030, with China's domestic power demand expected to grow at a compound annual rate of 8 to 9 percent through the end of the decade as AI infrastructure matures.

According to the China Electricity Council (CEC), the rapid development of the digital economy and emerging technologies has further catalyzed growth in energy demand.

The accelerated rollout of "new infrastructure", including 5G base stations and electric vehicle charging piles, has increased power consumption in the internet and related service sector by more than 30 percent, it said.

Unlike traditional industrial loads, data centers require a constant, high-volume supply of stable power. However, China's energy mix is increasingly dominated by intermittent wind and solar power located thousands of kilometers away from the eastern hubs.

This creates a paradox: the more China leans into AI, the more it requires a "smart" grid that can balance volatile renewable energy with the rigid demands of silicon.

Consequently, the synergy between grid operators, renewable energy providers and large-scale data center operators will define the next five years of economic policy.

While the previous decade was defined by building the "backbone" of the grid through massive UHV projects, the upcoming cycle will shift focus toward the "nervous system" — the distribution networks, said Zhang Lin, director of planning and development at the CEC.

Integrating the backbone grid with local and micro networks is now a strategic necessity to support new energy models and ensure fair market access for renewable providers, Zhang said.

State Grid and China Southern Power Grid are increasingly investing in "digital-intelligent" transformation.

This includes the deployment of AI-driven sensors and software to manage active distribution networks, allowing for the integration of decentralized energy sources like rooftop solar and electric vehicle charging stations.

For every 1 billion yuan spent on UHV lines or smart substations, there is a corresponding surge in demand for copper, steel, power semiconductors and high-end software, said Lin.

"By investing and planning ahead, Beijing is effectively de-risking the industrial sector," he said.

zhengxin@chinadaily.com.cn