China’s Grid Investments Surge to Support Record Renewable Energy Growth
China, the global leader in renewable energy development, is ramping up its investment in power infrastructure to ensure that its rapidly growing clean energy capacity reaches homes and businesses effectively.
In the first 11 months of last year, spending on power transmission infrastructure surged 19% to 529 billion yuan ($72 billion), according to the National Energy Administration.
While funding for new power generation capacity reached 866.5 billion yuan, its growth rate was 12%, marking the first time since 2018 that grid investment outpaced generation projects.
State Grid Corporation of China, the nation’s largest power operator, has pledged to increase spending to over 650 billion yuan by 2025, up from 600 billion yuan in 2024.
Similarly, China Southern Power Grid Company plans to boost its capital spending on network upgrades by more than 50% by 2027.
This infrastructure boom is also driving demand for key metals such as copper, steel, aluminum, and zinc, as the energy transition offsets losses in demand from China’s struggling property sector.
Wei Lai, deputy trading head at Zijin Mining Investment Shanghai Co., noted that faster grid expansion will further accelerate the need for copper.
China’s wind and solar capacity more than doubled from 2020 to 2024, reaching 1,350 gigawatts—surpassing the total power plant capacity in the United States, according to BloombergNEF. However, the rapid expansion has exposed challenges:
- Weather Dependency: Wind and solar energy are intermittent and rely on favorable weather conditions.
- Geographical Mismatch: Many renewable projects are located in remote areas far from major population centers, necessitating extensive power lines and energy storage systems.
These challenges have already led to power curtailments in some regions, where grids are unable to handle the surplus energy. For instance, while conditions have improved since 2016—when nearly half of all wind power in Gansu was curtailed—utilization rates for renewables have declined slightly.
Despite the clean energy boom, fossil fuels, particularly coal, continue to dominate China’s power generation mix. A failure to adapt the grid infrastructure in time could slow the pace of renewable energy deployment, jeopardizing the nation’s energy transition goals.
China’s aggressive investments in its power grid signal a recognition of the need for a robust infrastructure to match its renewable energy ambitions.
By addressing current bottlenecks, the country aims to cement its position as a global leader in the transition to clean energy. However, overcoming the challenges of intermittency, curtailment, and reliance on fossil fuels remains crucial to sustaining this momentum.
