China increases grid investment to support renewable energy surge

China is significantly increasing its grid investment to ensure efficient delivery of renewable energy to homes and businesses. According to the National Energy Administration, power transmission spending rose 19% to 529 billion yuan ($72 billion) in the first 11 months of 2023, marking a shift towards grid infrastructure, as reported by Bloomberg.

Investment in new power capacity was larger at 866.5 billion yuan, showing a 12% increase. This marks the first time since 2018 that grid investments have outpaced generation projects. State Grid Corp of China, the largest operator, plans to raise spending to over 650 billion yuan in 2025, up from 600 billion yuan in 2024.

The China Southern Power Grid is aiming to boost capital spending for network upgrades by more than 50% by 2027. The expansion is expected to drive demand for metals like copper, steel, aluminum, and zinc, which are essential for the energy transition despite the country’s slowing economy. China’s wind and solar capacity more than doubled from 2020 to 2024, reaching 1,350GW, surpassing the power production of all U.S. plants.

However, challenges remain, including weather dependency and the remote locations of renewable energy facilities, requiring more power lines and energy storage. Some regions have excess wind and solar power, leading to generation shutdowns due to grid limitations. Utilization rates for these technologies have declined, though conditions are improving compared to previous years.

Grid operators face pressure to quickly adapt, as coal still maintains a significant share in power generation. Delays in grid adaptation could hinder the renewable energy transition.

Source: Power Technology