China is set to inject a massive investment over $800 billion into its electricity system over the next six years, this is to upgrade its transmission system to accommodate new renewable energy sources as part of its efforts to expand its generation capacity.
China invested $17 billion in its power grid projects in the first four months of 2024, a 24.9% increase from the previous year. By comparison, the government of US President Joe Biden said in October that the US will be investing $3.5 billion, which will go towards 58 projects spread across 44 states.
According to estimates from Rystad Energy, China's capital expenditure is expected to rise from $102 billion in 2024 to $157 billion by 2030. A nation's capital expenditures are the sums of money that the government spends on investments or development projects that result in long-term assets. Any money spent on purchasing a non-current item—that is, an asset with a lifespan longer than a year—is considered a capital expenditure.
The Financial Times was informed by Climate Energy Finance's Xuyang Dong, a China energy analyst, that current spending levels are not keeping up with the rate at which China is adding new solar and wind capacity.
To put China's transmission system into perspective, the country is responsible for over 33% of the global expansion of the transmission grid and has the largest percentage of transmission lines under ten years old globally, including more than 500 000km of lines, according to the International Energy Agency.
Additionally, as of 2023, the nation possessed 60% of the world's solar capacity and 65% of the world's wind capacity. China requires a lot of electricity to power its economy, electricity production in China reached 717,850 GWh in May 2024, compared with 690,078 GWh in the previous month according to CEIC data.
In 2023, clean power made up 35% of China’s electricity mix, with hydro the largest single source of clean power at 13%. Wind and solar hit a new record share of 16%, above the global average (13%). China generated 37% of global wind and solar electricity in 2023, enough to power Japan. In the initial four months of year China’s electricity demand grew by 7.4% more than its 5.2% GDP for the first quarter. The rate at which China’s economy is growing, electrifying and adding new capacity makes grid expansion crucial.
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