"Smart Electricity Collaboration" brewing trillion-dollar investment opportunities

How can “computing and electricity synergy” break through the energy bottleneck of AI?

Written by Cheng Cheng

Edited by Li Zhuang

In 2026, “computing and electricity synergy” was mentioned for the first time in the government work report, marking the full launch of this “dimension-up battle” that will determine the future of the digital economy. This is not only to address the energy bottleneck in the global AI competition but also to systematically transform China’s wind and solar resource advantages and the leading edge of ultra-high voltage networks into new competitiveness. This is a revolution that reshapes the relationship between energy and digital technology from a fundamental logic perspective. It pushes the power grid from the cyclical track of “traditional infrastructure” to the growth track of “new productive forces,” opening up a trillion-level investment blueprint.

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In 2026, “computing and electricity synergy” was incorporated into the government work report for the first time and elevated to the same level as “East Data West Computing” as a national-level new infrastructure mainline. Its core lies in the country’s integrated planning of the computing power demand of the AI industry and the development of the energy power system, aiming to systematically convert China’s advantages in “wind and solar” resources and “ultra-high voltage” power grids into core competitiveness driving the digital economy. This transformation has fundamentally reshaped the underlying logic of the power grid equipment industry, elevating it from being a “traditional infrastructure” to a key infrastructure supporting the development of “new productive forces.”

For the secondary market, this means that the power grid equipment sector will undergo a systematic value reassessment, from valuation models to growth narratives. Investors’ focus is shifting from merely the amount of investment in ultra-high voltage to those companies that can play a key role in the new framework of “computing and electricity synergy,” including ultra-high voltage main network equipment (such as transformers and converter valves) that ensure large-capacity, long-distance green electricity transmission; intelligent distribution networks and digital systems supporting distributed computing centers and mass charging piles; as well as energy storage and virtual power plant technology providers acting as “regulators” for the interaction between computing load and the power grid. Therefore, industry leaders are no longer merely cyclical beneficiaries but have become core assets with long-term certainty and technological growth attributes, with their prosperity cycles and growth spaces being opened simultaneously.

“Computing and electricity synergy” is mentioned for the first time in the government work report.

[The 2026 government work report places “computing and electricity synergy” alongside “East Data West Computing,” achieving a systematic integration of “watts” and “bits,” promoting the symbiotic development of computing power and electricity from parallel growth.]

Since the full launch of the “East Data West Computing” project, its core logic has been to orderly guide the densely concentrated computing power demand in the east to the resource-rich west through national engineering scheduling, creating a nationwide integrated computing power network. It has initially resolved the “geographical distribution” problem of computing infrastructure, akin to drawing a backbone network for the development of the national digital economy. However, with the global technological competition ignited by generative AI represented by ChatGPT, the electricity demand generated by large model training and inference has shown an unprecedented exponential growth trend.

Against this backdrop, the proposal of “computing and electricity synergy” marks the recognition by decision-makers that computing power and electricity are no longer two parallel development tracks but must be deeply integrated and planned as a symbiotic entity. Elevating “computing and electricity synergy” to the same level as “East Data West Computing” means that in future new infrastructure investments and planning, data centers will no longer be viewed merely as large electricity consumers, and the power grid will no longer be seen simply as a power supply network. Both will be viewed as an organic whole that requires real-time interaction and dynamic balance for unified design and operation.

This brings profound changes in connotation. First, the goal shifts from “connection” to “optimization.” “East Data West Computing” focuses on the construction of physical channels for “sending western electricity east” and logical channels for “East Data West Computing,” addressing the issues of “availability” and “pathway.” In contrast, “computing and electricity synergy” focuses on “efficiency” and “resilience,” aiming to achieve optimal matching of electricity and computing resources in spatial and temporal dimensions through technological and management innovation, maximizing the economic and reliability of the entire system.

Second, the role of the power grid shifts from “supporter” to “participant.” Under the traditional model, the power grid is the “energy supplier” for computing centers, with a relatively unidirectional relationship. In the framework of “computing and electricity synergy,” the power grid needs to upgrade to an “intelligent scheduling platform.” The massive server cluster of the computing center, with its interruptible and adjustable load characteristics, will become a precious “flexible load” resource for the power grid. When the grid faces fluctuations or peak pressures, it can use price signals or scheduling instructions to delay or shift non-urgent computing tasks, thereby participating in the grid’s peak shaving and valley filling, enhancing the flexibility and stability of the entire power system.

Using green electricity is a basic requirement for the computing industry, while “computing and electricity synergy” requires the computing industry to actively assist the grid in accommodating the highly volatile wind and solar power, becoming a key stabilizer in building a new power system dominated by renewable energy. This represents a leap from passive consumption of green energy to actively supporting the energy revolution.

CITIC Securities pointed out in a research report that the inclusion of “computing and electricity synergy” in the government work report marks its elevation to a national level. With the overseas expansion of tokens and the tightening constraints on carbon emissions from data centers in China, stable and clean electricity is expected to become a core element of AI industry development. Zheshang Securities also noted in a research report that the inclusion of “computing and electricity synergy” in the government work report is not only a deepening of the “East Data West Computing” project but also a necessary path to solve the two core bottlenecks of “electricity costs” and “green electricity consumption” in the AI era.

It is worth mentioning that the “power shortage” dilemma unfolding abroad acts as a mirror, reflecting the foresight and urgency of “computing and electricity synergy.” Currently, global tech giants are caught in an intense AI arms race, but their ambitions are facing a fundamental limitation—electricity supply.

Public information shows that a large data center’s annual electricity consumption can easily exceed that of a medium-sized city. As the scale of model parameters expands several times a year, the accompanying energy consumption curve rises almost vertically. The ultra-large-scale data centers planned and constructed by giants like Microsoft, Google, and Amazon have design power consumption that often reaches gigawatt levels. According to a report by the International Energy Agency released in April 2025, the global data centers’ share of total electricity consumption has increased by 12% annually over the past five years. At the current rate, by 2030, global data centers’ electricity demand will more than double, reaching approximately 945 terawatt-hours per year, slightly higher than Japan’s total electricity consumption per year. IDC data also shows that AI data center IT energy consumption will reach 146.2 terawatt-hours by 2027. Goldman Sachs predicts that by 2030, global data centers’ electricity demand will grow by 160% from current levels.

As demand surges, supply-side bottlenecks have become apparent. In regions like North America and Europe, the upgrade of aging grid infrastructure is slow, and transmission capacity is severely limited. Media reports indicate that in certain areas of the U.S. with high electricity demand, new data center grid connection applications are already scheduled for after 2028. Countries like Ireland and Singapore have suspended or restricted the approval of new large data centers due to grid capacity nearing its limit. This dilemma of “having chips and facilities but no electricity available” is becoming a substantial constraint on the global AI industry.

In this global context, China’s “computing and electricity synergy” highlights its unique advantages. First, China possesses a unique physical foundation of “ultra-high voltage + large bases.” The interwoven ultra-high voltage transmission network can efficiently and low-loss transmit “wind and solar” resources from the western deserts over thousands of kilometers to the eastern computing hubs. This is a massive energy distribution system that is difficult for any other country to replicate in the short term. “Computing and electricity synergy” aims to deeply couple this powerful “electricity logistics system” with the “computing scheduling system,” accurately and reliably converting the “green electricity” from the west into “green computing” in the east.

Second, it represents a systematic construction of competitiveness. The challenges abroad indicate that relying solely on market capital to stack chips and servers cannot ensure the sustainable development of the computing industry. China’s strategy involves systematic planning at the national level, arranging energy, power grids, computing, and industrial policies as a “whole.” Through “computing and electricity synergy,” we are not only solving our own electricity security issues but also exploring a path for large-scale, low-cost, and green AI industry development. This aims to fuse China’s complete industrial system, ultra-large-scale market, leading advantages in renewable energy, and digital economy development goals, forming an unmatched comprehensive competitive edge.

Third, this provides a “Chinese solution” for the sustainable development of the global digital economy. While the world is anxious about the energy consumption of AI, “computing and electricity synergy” demonstrates how to turn challenges into opportunities through systematic innovation, converting energy constraints into industrial advantages. It points to a future where whoever has greener, more resilient, and more economical computing infrastructure will hold the initiative in the next digital revolution.

Thus, “computing and electricity synergy” not only determines the energy foundation and cost competitiveness of China’s digital economy but also opens up a grand investment map that far exceeds traditional grid investments, involving the interweaving of energy, computing, digitization, and other industries.

From “cycle” to “growth” value reassessment

[“Computing and electricity synergy” endows the power grid equipment with the attributes of “new infrastructure,” switching its logic from traditional cyclical stocks to technology growth stocks, leading to a systematic reconstruction of the valuation system.]

Since the beginning of 2026, against the backdrop of volatility in tech stocks and ongoing pressure on consumer sectors, the power grid equipment sector has strengthened against the trend, becoming a “safe haven” eagerly pursued by capital. Behind this phenomenon is not only the return of traditional infrastructure logic but also a valuation system reconstruction triggered by the “computing and electricity synergy” policy. The capital market’s perception is shifting from “cyclical manufacturing” to “new productive forces,” and the investment logic of power grid equipment companies is undergoing a qualitative change.

Statistical data shows that since the market opened after the Spring Festival, the power grid equipment sector has become one of the most active sectors in the A-share market. As of March 11, the Dazhihui Power Grid Equipment Index rose 19.23% between February 24 and March 11, while the Shanghai Composite Index only rose 1.26% in the same period. According to Wind data, from the market opening after the Spring Festival until March 11, a total of 81 power grid equipment stocks received net purchases of financing, among which State Grid NARI received leveraged funding of 348 million yuan, China XD Electric increased by 288 million yuan, and Changgao Electric New added 202 million yuan. Additionally, companies such as Mingyang Electric, Pinggao Electric, Hongfa Co., Ltd., Baobian Electric, and Sifang Co., Ltd. had net financing amounts between 100 million and 200 million yuan. This massive influx of funds indicates a high recognition of the sector’s prosperity by institutional investors.

It is noteworthy that the choice of funds also shows a clear “leader preference.” Top companies like TBEA and State Grid NARI not only hit record highs in stock prices but also became core targets for financing. This indicates that the market no longer views power grid equipment as a simple speculative theme but positions it as a core asset with long-term growth certainty.

After “computing and electricity synergy” was mentioned for the first time in the government work report, significant differentiation occurred within the sector. Stocks representing the concept of computing and electricity synergy, such as Jinkai New Energy and Henghua Technology, performed very actively during the Two Sessions. Jinkai New Energy, as a core target for the direct supply logic of green electricity, recently recorded an impressive “10 days, 5 boards” performance; Henghua Technology, as a power system planning and design service provider, also saw a notable increase in stock prices. The rise of these stocks is primarily driven by the realization of policy expectations, with the market anticipating that “computing and electricity synergy” will bring new business models and profit growth points for green electricity operators and power grid planning companies. In contrast, traditional equipment stocks, represented by TBEA, China XD Electric, and Far East Holding, benefited from the implementation of the “14th Five-Year Plan” for power grid investment. With the concentrated bidding and delivery of ultra-high voltage lines, these companies, backed by abundant orders and high visibility of performance, have demonstrated a steady upward trend. Their rising logic focuses more on performance realization and valuation recovery.

This differentiation reflects the market’s precise pricing of different segment investment logic: Some funds chase the imaginative space brought by policy dividends (“computing and electricity synergy”); others adhere to the solid realization of fundamentals (traditional infrastructure). For a long time, the power grid equipment sector has been viewed as a typical strong cyclical industry. Its valuation (PE) has been primarily influenced by the investment rhythm of the State Grid and the Southern Power Grid, displaying a clear “pulsating” characteristic: when the peak investment period arrives, the sector’s valuation rises rapidly; when investment enters a plateau or downturn, the valuation drops significantly.

This cyclical characteristic often leads investors to adopt a “buy low, sell high” strategy, making it difficult to grant the sector a long-term high valuation premium. The market generally perceives power grid equipment companies as traditional manufacturing industries with heavy assets that lack the explosive growth potential of tech stocks. However, with the deployment of “computing and electricity synergy” and the surge in electricity demand brought about by the global AI computing explosion, the underlying logic of the power grid equipment industry is undergoing a disruptive change.

In the AI era, electricity is no longer just a supporting resource for computing; it is the “lifeline” of the computing industry. Power grid equipment is no longer just a manufactured product but is becoming the “computing infrastructure” that supports the operation of the digital economy. This role transformation endows power grid equipment with attributes similar to technological infrastructure such as semiconductors and data centers. Some companies with capabilities for intelligent and flexible transformation are seeing their valuation logic align more closely with that of technology growth stocks.

For example, Jinpan Technology (688676.SH) is a power equipment supplier focusing on the research, development, production, and sales of various transformer series, complete sets, and energy storage series. Before 2025, the company was valued as a traditional power equipment company, but now, due to its leading position in AI data center transformers, it has achieved a valuation level far exceeding that of traditional power equipment companies, with the latest PE-TTM reaching 65.5 times, and the market views it as a scarce target for AI computing infrastructure. Notably, the commercialization of new technologies such as solid-state transformers (SST) and flexible direct current transmission has opened up a “second growth curve” for Jinpan Technology, allowing equipment companies to benefit from technological iteration. According to Jinpan Technology’s 2025 semiannual report data, its revenue in the data center sector has already exceeded 500 million yuan, a year-on-year increase of 460.51%.

In summary, the proposal of “computing and electricity synergy” has completely broken the cyclical curse of the power grid equipment industry. The consensus in the capital market is forming: power grid equipment is not just a “cyclical stock,” but a “growth stock” supporting the development of new productive forces. Leading enterprises with technical barriers and overseas capabilities are expected to see their valuation systems undergo a systematic reassessment, moving from traditional manufacturing industry valuations to technology infrastructure valuations.

Ultra-high voltage and main network framework:

The “artery” of cross-regional computing transmission

[The State Grid’s “14th Five-Year Plan” includes a 4 trillion yuan investment, with the core being ultra-high voltage direct current channels to solve the spatial mismatch between western green electricity and eastern computing power.]

So, who will determine the future of AI, “computing or energy?”

As global tech giants struggle in the face of energy bottlenecks, China is providing answers with its unique “national-level solutions.” One of the core projects of this solution is the ultra-high voltage power grid that spans east to west and north to south. Under the new concept of “computing and electricity synergy,” the strategic value and investment logic of the ultra-high voltage power grid are being re-evaluated and priced by the capital market.

Public information indicates that over 80% of China’s coal, hydropower, wind, and solar resources are distributed in the western and northeastern regions, while more than two-thirds of electricity consumption is concentrated in the central and eastern regions. As the “dual carbon” goals are advanced, large-scale development of renewable energy bases in the west, along with the exponential growth of electricity demand in the eastern computing centers, has created a clear “spatial mismatch” contradiction. The State Grid plans to invest over 4 trillion yuan during the “14th Five-Year Plan,” with the core goal being to systematically resolve this structural contradiction, and the ultra-high voltage direct current transmission project is the most critical and certain move in this “energy grand strategy.”

The 4 trillion yuan investment by the State Grid is not merely about laying lines but points to a clear strategic goal: to build a “new power system with ultra-high voltage as the backbone, intelligent distribution networks as the foundation, and coordinated development of various levels of power grids.” Its core tasks not only involve further densifying and reinforcing the inter-regional transmission channels based on the already built “22 AC and 20 DC” but also focus on planning and constructing large-scale wind and solar power base delivery projects in desert, gobi, and barren areas, while also enhancing the grid’s capacity for accommodating volatile renewable energy and operational control flexibility through advanced technologies such as flexible direct current transmission and unified flow controllers, transforming it from a rigid “power transmission network” into an intelligent “energy resource allocation platform.”

Currently, several landmark projects related to national energy security and regional coordinated development have entered the fast track of planning and construction. For instance, the construction of the “Southeast Tibet to Guangdong-Hong Kong-Macau” ±800 kV flexible direct current project, designed to transmit an electrical capacity of up to 10 million kilowatts. Once completed, it can continuously transport over 40 billion kilowatt-hours of electricity from Tibet to the Greater Bay Area load center every year, reducing carbon dioxide emissions by 33 million tons and providing stable green energy for its dense cluster of data centers.

It is foreseeable that during the “14th Five-Year Plan,” ultra-high voltage projects aimed at serving large clean energy bases, supporting regional power balance, and ensuring electricity supply safety for key urban agglomerations and computing power hubs will usher in a new round of approvals and construction peaks. According to research data from CITIC Construction Investment, during the “14th Five-Year Plan,” China will build more than 20 ultra-high voltage direct current projects and dozens of AC ultra-high voltage substations. This scale far exceeds previous construction cycles, demonstrating China’s sustained investment and development determination in the ultra-high voltage field. This will not only directly drive trillions of yuan in power grid investment but also physically reshape China’s energy geography, laying an indispensable hardware foundation for “East Data West Computing” and “computing and electricity synergy.”

The fast-tracking of ultra-high voltage construction will create a massive demand for high-end power equipment, presenting historic development opportunities for leading companies in the industrial chain. Firms with technical barriers, market share, and engineering performance advantages will become the core beneficiaries of this construction dividend.

TBEA (600089.SH) is the leading enterprise in China’s power transmission and transformation equipment manufacturing, leading in the ultra-high voltage AC transformer and converter transformer market share. In ultra-high voltage direct current projects, converter transformers are one of the core devices with the highest value and most complex technology, and their performance directly determines the efficiency and reliability of the entire transmission system. TBEA has also been deeply involved in almost all major projects from “West-East Electricity Transmission” to “Xinjiang Electricity Export,” becoming a representative of China’s high-end power equipment “going global” with its leading technology and cost control capabilities.

In January of this year, TBEA stated on an interactive platform that “the gross profit level of our overseas power transmission and transformation orders is slightly higher than that of domestic orders. The company will fully utilize its technical accumulation in the power transmission and transformation field to actively participate in overseas market competition. In recent years, the company has implemented a series of digital technology transformation projects in power transmission and transformation around the directions of ‘intelligent, high-end, and green,’ continuously improving capacity utilization through digital transformation and process optimization. Currently, the annual production capacity of transformers and reactors is nearly 500 million kVA. Meanwhile, the company will prudently evaluate its production capacity based on market demand and current capacity, and if necessary, will enhance capacity through new construction or technological upgrades.”

Currently, TBEA’s overseas business, especially in total package (EPC) projects in regions along the “Belt and Road” such as the Middle East, Central Asia, and Africa, is flourishing, opening up a second growth curve outside of cyclical domestic power grid investments, smoothing performance fluctuations and enhancing growth certainty. According to Huatai Securities research data, in 2023, 2024, and the first half of 2025, the company achieved contracts in international markets worth over 700 million, 1.2 billion, and 1.12 billion U.S. dollars, respectively, with a year-on-year growth of 65.9% in the first half of 2025; as of the first half of 2025, the company’s international complete power transmission and transformation project contract amount exceeded 5 billion U.S. dollars.

If the ultra-high voltage line is the “energy highway,” then the scheduling automation, relay protection, and stability control systems provided by State Grid NARI (600406.SH) are the “intelligent brain and nervous system” of this highway.

In the new power system, the operational control of the ultra-high voltage grid faces unprecedented challenges: the sending end consists of highly volatile wind and solar renewable energy, while the receiving end is characterized by increasingly random distributed loads and clusters of data centers. This requires the control system to have strong real-time perception, intelligent decision-making, and precise control capabilities. State Grid NARI has extremely high technical barriers and market share in the secondary equipment (control protection) field, and its scheduling automation system is widely used across various levels of power grids in the country. As the grid accelerates its transition to digitization and intelligence, the requirements for the “brain” have become increasingly high, and the company’s advantages in software, algorithms, and system integration will become even more prominent. Its business has transcended simple hardware sales, upgrading to provide high value-added solutions and services, with profitability and valuation ceilings expected to rise in tandem.

During institutional research, the company revealed that it has successively won bids for projects such as the ±800 kV ultra-high voltage direct current transmission project from Ningxia to Hunan, the Jinshang-Hubei ±800 kV ultra-high voltage direct current project, the Gansu-Zhejiang ±800 kV ultra-high voltage direct current project, the Inner Mongolia-Western Beijing-Tianjin-Hebei ±800 kV ultra-high voltage direct current project, and the Southeast Tibet-Guangdong-Hong Kong-Macau ultra-high voltage flexible direct current project; in terms of international business, it has won bids for projects such as the BorWin6 offshore wind power project in Germany, the ±600 kV direct current project of the Itaipu hydropower station in Brazil, and the flexible direct current project in Saudi Arabia, achieving exports of high-end ultra-high voltage equipment.

In the field of ultra-high voltage direct current, XJ Electric (000400.SZ) is a core supplier of converter valves and direct current control protection systems. Especially in the flexible direct current transmission (VSC-HVDC) field, which represents the pinnacle of global transmission technology, the company has strong technical strength. Flexible direct current transmission can independently, rapidly, and flexibly control active and reactive power, making it particularly suitable for constructing interconnections of asynchronous power grids, integrating new energy, transmitting offshore wind power, and supplying power to passive networks in complex scenarios. In the process of building a new power system dominated by renewable energy, flexible direct current technology plays an irreplaceable role in enhancing the safety and stability of the grid and achieving complementary and mutual assistance of various energy sources. As a national team leader in this field, XJ Electric will benefit deeply from the future increase in the proportion of flexible direct current projects, with its growth characterized by distinct “technology-driven” features.

Huayuan Securities pointed out in its research report that "flexible direct current is expected to emerge from the trough and develop towards deep-sea areas during the ‘14th Five-Year Plan,’ with flexible direct current expected to become the main transmission technology for offshore wind power. XJ Electric, as one of China’s leading direct current transmission equipment companies, is expected to benefit significantly. Additionally, the pressure for renewable energy absorption in the Sanbei region is increasing, and ultra-high voltage will serve as the main absorption method, with long-term demand expected to remain strong.

During an investor inquiry, XJ Electric revealed that it has achieved several technological breakthroughs in the field of flexible direct current converter valves, having developed a 5 kV class flexible direct current converter valve successfully applied in the world’s first ultra-high voltage fully flexible direct current project in Zhejiang and Gansu, developed IGCT flexible direct current valves and first applied them in the Tangxia project, providing new technical support for lightweight converter valves; it has also successfully developed energy self-balancing flexible direct current converter valves, addressing the challenge of rapid energy balancing in ultra-high voltage long-distance and new energy access flexible direct current transmission systems.

Clearly, ultra-high voltage has transcended the category of simple power infrastructure; it serves as the “energy foundation” constructed under national will for the era of digital economy, connecting the energy production revolution with the digital consumption revolution. The more than 4 trillion yuan in power grid investment during the “14th Five-Year Plan,” particularly the continued emphasis on the ultra-high voltage main network framework, is not only aimed at ensuring electricity supply security but also at seizing the energy high ground in global competition in the AI era.

Intelligent distribution networks: The “capillaries” of computing load

[In the face of distributed power sources and AI data center connections, distribution networks need to upgrade from “passive, rigid” to “active, flexible, intelligent.”]

If ultra-high voltage is the “artery” for sending electricity from the west to the east, then the distribution network is the “capillary” that delivers electricity to millions of households and massive terminal loads. In the new era of “computing and electricity synergy,” this “capillary” system is facing an unprecedented profound transformation.

In the past, electrical energy flowed unidirectionally and stably from the large power grid to relatively predictable industrial and civilian loads; in the future, electricity will need to interact bidirectionally, dynamically, and instantly with thousands of “prosumers,” including vast distributed photovoltaics, electric vehicle charging piles, and most importantly, the new type of load—AI computing centers with high energy consumption and high reliability requirements. This requires the distribution network to evolve from a “passive, non-source, rigid” traditional network to an “active, source-based, flexible” intelligent network. A revolution in distribution network intelligence driven by policy and demand has already begun, and the impetus behind this change comes from structural shifts on both the supply and demand sides.

On the supply side, the transformation of the energy structure has led to an “unordered influx.” Under the “dual carbon” goal, new energy represented by distributed photovoltaics is connecting to the distribution network at an unprecedented speed, especially in vast rural areas and urban-rural junctions. These power sources are numerous, widespread, and exhibit random fluctuations, completely overturning the traditional “radial, unidirectional flow” operational mode of distribution networks. The design of traditional distribution networks struggles to cope with this unpredictable flow direction and severe power fluctuations, easily triggering a series of problems such as voltage exceeding limits, declining power quality, and protection malfunctions. How to “see, manage, and utilize” these massive and dispersed green power sources is the primary challenge that must be addressed in the intelligent transformation of distribution networks.

On the demand side, the upgrade of load structure presents “stringent demands.” The rise of AI computing centers is another driving force for this transformation. Compared to traditional industrial loads, computing centers represent a typical “critical sensitive load.” A large cluster of data centers can have a power load of hundreds of megawatts, comparable to that of a small to medium-sized city, with deployment speed and density far exceeding traditional loads. A power reliability of 99.99% or even higher is a basic requirement, and even a millisecond of power interruption can lead to huge economic losses and training failures. Moreover, server chips are extremely sensitive to voltage drops, harmonics, and other power quality issues, necessitating high-quality power assurance. This requires the distribution network not only to upgrade from “capillaries” to “precision vessels” with stronger carrying capacity and self-healing capabilities but also to have the ability to “dialogue and collaborate” with computing centers, achieving “load movement with source” and even “source-load interaction,” jointly supporting the safety and stability of the large power grid.

In response to the above contradictions, the National Energy Administration has clearly stated in documents such as the “Guiding Opinions on the High-Quality Development of Distribution Networks Under the New Situation” that it aims to “create a new distribution system that is safe and efficient, clean and low-carbon, flexible and intelligent, and smartly integrated,” establishing the main tone that investment in distribution networks will continue to increase during the “14th Five-Year Plan.”

The focus of policy efforts is clearly on “intelligence, flexibility, and digitalization.” For example, promoting the widespread deployment of intelligent sensing devices (DTU, FTU, TTU, etc.) to achieve comprehensive perception of the operational state of distribution networks, distributed power sources, and new loads, thereby resolving the “blind adjustment” issue; promoting the application of intelligent switches that integrate primary and secondary equipment, combined with distribution automation master station systems to achieve rapid location, isolation, and restoration of power supply in non-fault areas, reducing power outage times from “hourly” to “minute” or even “second” levels; building a new generation of intelligent distribution network scheduling and control systems that possess aggregation management and optimization control capabilities for massive distributed resources such as distributed power sources, energy storage, and adjustable loads, i.e., supporting the dispatch of “virtual power plants”; in key areas such as data centers and high-end manufacturing parks, promoting high-reliability power supply structures such as “petal” and “dual-loop networks” based on flexible interconnections, distributed energy storage, and fast switches, to meet the stringent demands of computing centers and other sensitive loads, etc.

This indicates that the focus of investment in distribution networks is shifting from “coverage extension” in the past to “quality enhancement and upgrading.” Investments will be significantly allocated to smart terminals, communication networks, software systems, and flexible transformations, opening a sustained, stable, and large-scale incremental market for related industry chain companies, with some leading enterprises possessing core technologies, mature products, and rich project experience set to benefit.

For example, Siyuan Electric (002028.SZ) has a core advantage in deeply integrating traditional primary equipment such as switches and current transformers with intelligent monitoring units to form “integrated smart equipment.” Its product line covers a broad range from medium and low-voltage switches to dynamic reactive power compensation (SVG), and its GIS (gas-insulated switchgear) is widely applied in scenarios such as renewable energy boosting stations and data center power supply. Due to its solid manufacturing capabilities and continuous R&D investments, Siyuan Electric leads the market share in collective procurement by the State Grid and Southern Power Grid, making it one of the most certain core hardware suppliers in the intelligent transformation of distribution networks.

On January 15 this year, Siyuan Electric announced its preliminary report for 2025, achieving revenue of 21.21 billion yuan, a year-on-year increase of 37.2%; achieving a net profit attributable to the parent company of 3.16 billion yuan, a year-on-year increase of 54.4%. In its performance report commentary, Guojin Securities expressed strong optimism for Siyuan Electric, stating that against the backdrop of high prosperity in the data center industry, the company’s supercapacitors have the ability to be introduced into data centers, and the artificial intelligence data center (AIDC) business is expected to continue to materialize; the company has established a joint venture with Huairou Laboratory to operate power electronic technology products based on the IGCT device platform, which is expected to enter the ultra-high voltage field in the future; it has signed a three-year cooperation memorandum with CATL, targeting a collaborative electricity volume of 50 GWh, accelerating the large-scale application of energy storage systems and further opening growth space.

Sifang Co., Ltd. (601126.SH) has core advantages in secondary equipment and control protection systems, being one of the few companies in China capable of providing a full set of solutions for data center AC and DC distribution systems. In the field of relay protection and distribution network automation, Sifang Co., Ltd.'s solutions can significantly enhance the safety defense capability and flexible control level of distribution networks. Especially in distribution networks with a high proportion of new energy access and microgrid projects, its protection and control technology advantages are evident, making it an “invisible champion” that ensures the safe and stable operation of the power grid.

Regarding the explosive industry opportunities and special demands of AIDC in the future, Sifang Co., Ltd. stated during a recent institutional inquiry, “The company is accelerating adaptive design optimization and development and will soon launch relevant SST product series.” Currently, Sifang Co., Ltd.'s SST products cover a full range of specifications for AC 10kV—35kV access, DC 20kV—60kV access, and 240V—800V DC output, successfully applied in multiple national demonstration projects such as the Dongguan Xiangwei multi-station unified direct current microgrid demonstration project and the Ningbo Cixi hydrogen-electric coupling direct current microgrid demonstration project.

Southern Power Grid Technology (688248.SH) is the “incubator” and “converter” for cutting-edge technologies in grid intelligence. As a listed platform in the Southern Power Grid system focused on application technology research and development and achievement transformation, its core mission is to promote the digitization and intelligence of grid technology. The company is at the forefront of the industry in intelligent monitoring devices, intelligent live-working robots, energy storage system integration, intelligent microgrids, and virtual power plant platforms. Unlike pure equipment manufacturers, Southern Power Grid Technology focuses more on providing comprehensive solutions of “monitoring terminals + analysis software + platform services,” with its core value lying in a deep understanding of the operational pain points of the power grid and the ability to rapidly convert cutting-edge technologies (such as AI image recognition, digital twins, and IoT sensing) into usable products and services for the grid.

Zheshang Securities pointed out that the new energy storage business of Southern Power Grid Technology is expected to expand rapidly, with experimental testing and debugging businesses achieving cross-regional breakthroughs and high prosperity in downstream application fields; intelligent devices are expected to benefit from the accelerated demand for grid intelligence, and power electronics products are achieving breakthroughs in large-scale orders. Considering the pace of business expansion and the certainty of receipt cycles, it is expected that the company’s net profit attributable to the parent company will be 460 million yuan, 634 million yuan, and 801 million yuan, respectively, in 2025—2027.

Energy storage and virtual power plants:

The “regulator” of “computing and electricity synergy”

[Energy storage solves the “time shift” of green electricity and supply reliability, while virtual power plants aggregate computing loads to participate in grid interaction and realize value.]

The essence of “computing and electricity synergy” lies in the word “synergy.” It requires that the power system and computing system no longer represent a simple supply and consumption relationship but an intelligent ecosystem of bidirectional interaction and mutual benefit. Energy storage and virtual power plants are the core technological pathways to realize this advanced synergy.

For computing centers, the value of energy storage systems is multidimensional and indispensable; they serve as the “super power banks” and “stabilizers” of computing centers, storing electricity during peak wind and solar generation times and discharging during peak demand times, solving the temporal mismatch between new energy generation and computing electricity consumption, while enhancing the proportion of green electricity and reducing costs, and quickly managing voltage fluctuations and harmonics to provide high-quality power for precision servers, ensuring stable operation of the equipment.

Virtual power plants act as “aggregators” of computing loads and “value realization platforms,” with the core function of aggregating massive and dispersed computing loads (as well as other distributed resources such as energy storage and adjustable air conditioning) to form a visible, measurable, and controllable “virtual power plant,” participating in grid scheduling and electricity market transactions. Its core role is to flexibly adjust computing loads during peak periods of the grid to generate revenue, assisting the grid in peak shaving and valley filling, and also enabling independent participation in electricity spot and ancillary services markets, transforming load adjustment capabilities into electricity income and reducing overall operational costs.

Currently, in the new business landscape stimulated by “computing and electricity synergy,” leaders in energy storage system integration and explorers of virtual power plant platforms are expected to stand out. In the field of energy storage system integration, representative companies include Sungrow Power Supply, Haibo Sichuang, CATL, BYD, Kstar, and Canadian Solar, while in the area of virtual power plant platforms, representative companies include State Grid NARI, GCL-Poly Energy, Southern Power Grid Technology, Guoneng Rixin, and Canaan Intelligent.

Sungrow Power Supply (300274.SZ), originating from photovoltaic inverters, relies on its capabilities in “three energy integration” (power electronics + electrochemistry + grid support), ranking second among global energy storage system integrators in 2024. According to Northeast Securities’ research report data, the company’s energy storage shipments grew by 70% year-on-year in the first three quarters of