--- title: "Bank of China International: Power grid upgrades and renovations drive demand, and the industry chain is expected to benefit" type: "News" locale: "en" url: "https://longbridge.com/en/news/239274083.md" description: "Bank of China International released a research report pointing out that the increase in the proportion of global new energy installed capacity and the emergence of new electricity usage scenarios are driving the demand for grid expansion and upgrades. The power equipment industry chain is expected to benefit directly, with the acceleration of ultra-high voltage construction and the improvement of flexible DC technology penetration. Domestic distribution network renovation is speeding up, and overseas grid renovation plans are increasing transformer demand. The global power system is facing new challenges, and countries are increasing power investments, making the outlook for the power equipment industry chain optimistic" datetime: "2025-05-08T07:28:09.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/239274083.md) - [en](https://longbridge.com/en/news/239274083.md) - [zh-HK](https://longbridge.com/zh-HK/news/239274083.md) generator: "portal-rs" --- # Bank of China International: Power grid upgrades and renovations drive demand, and the industry chain is expected to benefit According to the Zhitong Finance APP, China International Capital Corporation (CICC) has released a research report stating that with the increase in the proportion of global new energy installed capacity and the continuous emergence of new electricity consumption scenarios such as computing power, there are higher demands for the expansion and upgrading of the power grid, which is expected to directly benefit power equipment. In terms of the main grid, the demand for inter-regional electricity transmission and the delivery of new energy generation is driving the construction of ultra-high voltage (UHV) systems, and flexible direct current technology is expected to enhance penetration rates; in terms of the distribution network, domestic distribution network renovations are accelerating, and overseas countries are launching grid renovation plans, leading to an increased demand for transformers, which is expected to benefit the industrial chain. ## The main viewpoints of CICC are as follows: **The power system faces new challenges, and the demand for grid expansion and upgrading is increasing** The global power system is facing new changes on the generation side, grid side, and consumption side. On the generation side, the proportion of new energy generation is gradually increasing, highlighting the pressure of absorbing new energy generation; on the grid side, outdated grids urgently need to be renovated to meet the growing demand; on the user side, strategic emerging industries represented by AI, large models, and data centers are developing rapidly, with new electricity consumption scenarios continuously emerging, leading to an increasing demand for electricity. Against this backdrop, the global power system is facing demands for upgrading and expansion, and countries are increasing their investments in electricity, which is expected to directly benefit the power equipment industrial chain. **In terms of the main grid, UHV construction is accelerating, and flexible direct current technology is expected to enhance penetration rates** The growing demand for inter-provincial electricity flow, combined with the pressure of absorbing new energy generation, is driving the demand for UHV construction. As of December 2024, China has built and put into operation a total of 41 UHV transmission lines, including 20 AC lines and 21 DC lines. During the 14th Five-Year Plan period, China will start construction on "three AC and nine DC" UHV lines, and it is expected that during the 15th Five-Year Plan period, more than 20 UHV lines will be put into operation, which is expected to increase the demand for industrial chain equipment. DC UHV has advantages over AC UHV in long-distance transmission, and the number of lines under construction is expected to remain at a high level. Among DC UHV, flexible direct current technology has advantages in large-scale new energy generation delivery due to issues such as no commutation failure. In the future, as the prices of core components such as IGBT decrease, it is expected to gradually become the mainstream technology. According to predictions from Polaris Power, China's investment scale will reach 380 billion yuan from 2021 to 2025, and companies producing core components such as converter valves are expected to benefit. **In terms of the distribution network, domestic distribution network renovations combined with overseas grid updates are expected to increase transformer demand** Both domestically and overseas, plans have been proposed for distribution network renovations, and transformers are expected to benefit directly. On the demand side, China has proposed actions for high-quality development of the distribution network, emphasizing the continuous deepening of distribution network construction and renovation to improve reliability and capacity; the European Union has proposed an investment of 584 billion euros to modernize the grid, and the aging U.S. grid needs renovation. On the supply side, China's transformer production accounts for 35% of the global share, with exports at a high level. Due to capacity constraints on oriented silicon steel overseas, there is a shortage of capacity and price increases. Transformers can benefit from global distribution network renovations, and Chinese transformer companies have strong competitiveness, which is expected to benefit from the growth in overseas market demand **Investment Advice** New electricity consumption scenarios represented by computing power are continuously emerging, creating greater electricity demand and imposing higher requirements for grid upgrades and expansions. In terms of the main grid, the delivery of renewable energy generation is accelerating the construction of ultra-high voltage (UHV) infrastructure, with an increase in the number of UHV direct current projects starting. Flexible UHV direct current has advantages, and as IGBT costs decrease, its penetration rate is expected to gradually increase, benefiting related industry chain companies. In the distribution network, domestic efforts to promote distribution network renovation continue, and there is strong demand for overseas grid renovations, leading to significant demand for transformers. It is recommended to pay attention to main grid-related targets that benefit from the high prosperity of UHV, as well as the transformer sector with overseas expansion logic. Recommended: HUAMING (002270.SZ), HaiXing Electric Power (603556.SH), and suggested to pay attention to China XD (601179.SH), NARI-TECH (600406.SH), SiYuan Electric (002028.SZ), HPEC (600312.SH), MingYang Electric (301291.SZ), SIFANG (601126.SH), and Jiangsu Huachen (603097.SH). **Risk Factors** Price competition exceeds expectations, adverse fluctuations in raw material prices, risks of international trade friction, policies not meeting expectations, risks of renewable energy consumption, and a decline in the growth rate of electricity investment ### Related Stocks - [600406.CN](https://longbridge.com/en/quote/600406.CN.md) - [601126.CN](https://longbridge.com/en/quote/601126.CN.md) - [002270.CN](https://longbridge.com/en/quote/002270.CN.md) - [601179.CN](https://longbridge.com/en/quote/601179.CN.md) - [600312.CN](https://longbridge.com/en/quote/600312.CN.md) - [603556.CN](https://longbridge.com/en/quote/603556.CN.md) - [PII.US](https://longbridge.com/en/quote/PII.US.md) - [002028.CN](https://longbridge.com/en/quote/002028.CN.md) ## Related News & Research - [PFSE: Record Q2 revenue and profit growth, driven by strong demand and innovation in HVDC technology](https://longbridge.com/en/news/296308264.md) - [REG - Aberdeen Asian Inc - Director/PDMR Shareholding](https://longbridge.com/en/news/296505605.md) - [Multicoin Capital-Linked Wallet Transfers 197,560 HYPE to CEX, Raising Sale Concerns](https://longbridge.com/en/news/296661501.md) - [Cell C publishes pro forma financials after Comm Equipment Company merger](https://longbridge.com/en/news/296585930.md) - [09:12 ETVolta Insite and Atom Power Bring Electrical Intelligence to RPP at Yotta 2026](https://longbridge.com/en/news/296234146.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**