China Prepares Major Energy Investment to Chase AI Electricity Surge

High-voltage power grid in China. The Chinese government is preparing major investments in the energy sector and the power grid to meet the surge in electricity demand, including from the development of artificial intelligence (AI). Photo: China Daily

JAKARTA - China is preparing to invest more than 20 trillion yuan or around 3 trillion US dollars to strengthen its energy system in the next five years. The need for electricity from the artificial intelligence or AI sector is one of the triggers.

China Daily, quoted on Sunday, June 28, reported that the head of China's National Energy Administration, Wang Hongzhi, said that the national energy production capacity would reach 5.8 billion metric tons of coal equivalent by 2030. The target was set to strengthen energy independence and keep imports diverse and under control.

China's newly installed power capacity of more than 4 billion kilowatts is expected to rise to 5.4 billion kilowatts by 2030.

In that year, new energy sources are targeted to account for more than half of installed capacity and electricity generation. Its role will be even greater when coal and oil consumption reach their peak.

Wang gave an example, making a five-second high-definition video with AI requires the equivalent of charging 10 smart phones.

"To respond to this very rapid growth, we will coordinate the allocation of energy resources with the development of computing infrastructure, as well as encourage synergies between computing and electricity supply," said Wang.

China will connect national computing centers with large renewable energy bases in the western region. In the east, the government will encourage distributed generation, microgrids, and virtual power plants. A virtual power plant is a system that regulates many small power sources to work like one large plant.

China's National Energy Administration (NEA) said non-fossil fuels accounted for 45 percent of additional energy consumption during the 14th Five-Year Plan in 2021-2025. The share will be raised in the 15th Five-Year Plan in 2026-2030.

Additional electricity needs will be met mainly from clean energy, such as wind, solar, hydro, and nuclear power.

General Manager of the China Renewable Energy Engineering Institute Yi Yuechun said China's electricity supply in the 2026-2030 period will leave a pattern dominated by fossil fuels. Renewable energy, he said, will become the main energy source faster.

To support the change, China's non-fossil capacity is targeted to exceed 3.5 billion kilowatts by the end of the decade. That figure is up almost 50 percent from 2025. Wind and solar power alone will account for more than 2.8 billion kilowatts.

The power grid will also be strengthened. In the next five years, the fixed asset investment of the national power grid is expected to exceed 5 trillion yuan. China will also add 15 ultra-high voltage direct current corridors or UHV for green electricity.

The corridor will increase the delivery of electricity from west to east to more than 420 million kilowatts. China is also preparing to increase distribution networks and smart microgrids to support charging more than 110 million electric vehicles.

Senior engineer of the State Grid Energy Research Institute Ye Xiaoning said that the modernization of the electricity grid would strengthen China's ability to distribute renewable energy to various regions. According to him, the UHV network is the backbone of this energy system change.