November 7, 2025, Financial Investment Report
How to View the Demand for Power Equipment Exports
Wen Xing
For some time, I have been analyzing the demand for power driven by AI computing power, and then discussing the progress of controlled nuclear fusion, also known as artificial suns, while continuously involving related listed companies. From the market response, it can be said that my research approach aligns with the current trends in the stock market. Today, I will take a look at the reality of power exports.
One reason developed regions are considered developed is their advanced infrastructure construction, and another aspect of this advancement is that it has become outdated. Particularly in North America and Europe, due to early development, the power grids in these regions are now facing aging equipment and a surge in power demand (especially driven by AI and data centers), leading to a significant need for upgrades.
The current situation in the North American market: the average service life of grid equipment exceeds 40 years, with 31% of transmission assets and 46% of distribution assets being overdue, and 55% of operational distribution transformers exceeding 33 years of use (design life is 30 years). Power demand is exploding due to AI data centers, and it is expected that by 2030, the electricity consumption of data centers in the United States will account for 12% of the national total. If grid upgrades lag behind, the power demand in the AI sector may exceed the net generation capacity of the U.S. grid by 2030. Upgrade scale: the U.S. plans to invest over 1.1 trillion dollars in grid upgrades over the next five years, with expenditures expected to reach 207.9 billion dollars in 2025, a year-on-year increase of nearly 50%. For transformers alone, the annual replacement demand in the U.S. exceeds 50,000 units, with domestic production only meeting 30%, leaving 70% reliant on imports. The current situation in the European market: the average age of the grid is 45-50 years, making it the oldest grid system in the world, with most equipment built in the 1960s-80s, exceeding design life. The integration of renewable energy (with wind and solar accounting for 65%) and the demand from AI data centers further exacerbates the load pressure on the grid. For example, in the Netherlands, after more than a third of households installed solar panels, the approval period for new residential connections to the grid has significantly extended. Upgrade scale: Europe is expected to invest approximately 1.2-1.4 trillion euros in grid upgrades over the next decade, with capital expenditures for transmission and distribution potentially doubling. The European Commission estimates that Europe will need to invest 2-2.3 trillion dollars in grid upgrades by 2050 to meet energy transition and power reliability demands.
The International Energy Agency (IEA) is an autonomous intergovernmental organization under the framework of the Organization for Economic Cooperation and Development, focusing on global energy security and sustainable development. I found the IEA’s perspective, which states that global demand is continuously expanding: IEA predicts that by 2050, global electricity demand will double compared to 2021, and from 2023 to 2030, the average annual global investment in power grids is expected to reach 50-55 billion dollars. Among them, the demand for transformers is particularly prominent, with the global transformer market expected to grow from 58.8 billion dollars to 109.5 billion dollars from 2023 to 2032. Europe and the U.S. are the core incremental markets: the equipment in the European and American grids is mostly overdue, and the demand for upgrades is urgent due to the growth in electricity consumption driven by AI data centers and the renewable energy industry. Emerging markets are steadily expanding: regions such as Asia, Africa, and Latin America have significant electricity gaps. Saudi Arabia’s import of transmission and transformation equipment is expected to reach 8 billion dollars by 2025, and countries like Brazil and Chile are experiencing a surge in new energy installations. In 2024, China’s exports of power equipment to Latin America are expected to grow by 34% year-on-year, making these regions important growth points for grid equipment demand.
Now let’s take a look at how Chinese companies are positioned in such a vast market. I believe that China has mastered the core technology of ±1100kV ultra-high voltage, with bidding prices for ultra-high voltage equipment being 20%-30% lower than Siemens, and it possesses the only complete industrial chain for grid equipment in the world. The production cycle is much shorter than that of overseas manufacturers, with some ultra-high voltage equipment completed in just 3-6 months, and costs are 20%-30% lower than those in Europe and the U.S. From January to August 2025, China’s transformer export value increased by 51.42% year-on-year, demonstrating significant competitiveness. Chinese companies have technological and industrial chain advantages. They are also leveraging the Belt and Road Initiative while simultaneously targeting high-end markets in Europe and the U.S. Companies are avoiding trade barriers through localized production, such as Jinpan Technology establishing a factory in Mexico and TCL Zhonghuan starting production in Malaysia. Some companies are collaborating with overseas firms, such as State Grid NARI and Siemens co-establishing a research and development center to adapt to the European market. Chinese companies have a comprehensive and flexible market layout. I believe that TBEA’s global market share in transmission and transformation equipment is about 12%, having won a multi-billion dollar project in Saudi Arabia; Sungrow’s inverter has a global market share of 38%, with a share of 70% in the Middle East’s energy storage integrated systems; State Grid NARI’s ultra-high voltage direct current control system has a domestic market share exceeding 40%, actively participating in multiple overseas grid renovation projects. Chinese companies are strong competitors in their respective segments.
Despite this, I believe that while Chinese companies have significant advantages, there are still considerable challenges in capturing this market or a substantial share of it. Especially in the core markets of Europe and the U.S., breakthroughs are limited for the following reasons. U.S. legislation prohibits Chinese companies with ≥25% ownership from participating in federal funding projects, and the EU’s carbon tariffs increase export costs by 5%-8%. Additionally, the technical certification process is cumbersome, extending the time to market for products and restricting companies’ expansion in the European and American markets. There are trade and policy barriers. Local manufacturers in Europe and the U.S. still have a foundation in certain high-end components, and Chinese companies hold less than 5% market share in the U.S. Furthermore, global competition is fierce, with South Africa’s 25 billion dollar transmission network expansion plan attracting 17 companies to bid, diverting market share. There is regional competition and market restrictions. In high-end power electronic components and other fields, South Korean and Japanese companies still hold advantages, and some core components of Chinese companies rely on imports, which affects their comprehensive breakthroughs in high-end markets and makes it difficult to achieve widespread penetration in overseas markets. There are shortcomings in some core links.
Nevertheless, the demand for electricity and grid equipment upgrades driven by AI is directly benefiting leading A-share companies in fields such as ultra-high voltage, smart grids, and power supply equipment for data centers. State Grid NARI (600406): a core leader in the field of grid intelligence, with a market share of over 40% in grid automation systems. TBEA ranks first in the global transformer market, with a market share of 35% in ultra-high voltage converter transformers. Jinpan Technology is a leading global company in solid-state transformer technology and a core supplier of power distribution equipment for data centers. Sifang Co., Ltd. is a leader in power system protection and control, providing a full set of power supply and distribution solutions for AI data centers. Zhongheng Electric is the absolute leader in the domestic high-voltage direct current (HVDC) market, maintaining the top market share. Its HVDC products have an efficiency exceeding 96%. Megmeet is the only A-share power supply vendor officially certified by NVIDIA, providing core power solutions for NVIDIA’s AI servers. China XD Group is a leader in high-voltage switchgear, with its 800kV GIS products passing international certification. Siyi Electric is a leading private enterprise in power equipment, focusing on core products such as power automation protection equipment.
Of course, there are also new development ideas. Since there are limitations to electricity on Earth, building data centers in space has become a choice for more and more technology companies in Silicon Valley. I plan to discuss the industrial opportunities brought by this idea next time.