China Galaxy Securities Zeng Tao: Power Bottlenecks in Overseas AI Industry Chain Emerge; Domestic Power System Upgrades Are Timely

In recent years, the global artificial intelligence industry has experienced rapid development, with explosive growth in computing power demand. However, the construction of AI infrastructure in key regions such as North America and Europe continues to face challenges related to power supply shortages and grid stability. domestically, the new power system construction centered on renewable energy has entered a deepening stage, with ongoing investments in grid upgrades, energy storage expansion, and energy digitalization. The power sector is becoming a key investment focus under the dual guidance of steady growth and energy transition.

Recently, China Galaxy Securities’ chief analyst of power equipment and new energy, Zeng Tao, was interviewed to provide an in-depth analysis of the changes in the global power supply and demand pattern caused by overseas AI development and the upgrade path of China’s power system.

AI Power Demand Surge

Recently, regional power shortages caused by AI computing power expansion in North America, Europe, and other areas have gradually affected the construction progress of large data center projects. According to Zeng Tao, this is not a short-term bottleneck but a concentrated manifestation of long-term structural contradictions. The core issue lies in the exponential increase in energy consumption of AI data centers, while the backup capacity of power grids in Europe and America is nearing exhaustion. Coupled with transformer shortages and the long cycle of traditional grid upgrades and renovations, short-term power supply cannot meet the explosive demand.

“This contradiction is having a profound impact on the global AI industry chain layout,” Zeng Tao believes. This contradiction mainly manifests in three aspects: First, the industrial geographic layout is beginning to shift toward regions with more abundant power resources, such as Virginia in the US, which faces pressure on traditional data center hubs, while regions like the Midwest of the US, Canada, Northern Europe, and Southeast Asia are becoming more attractive; second, the power supply model is undergoing fundamental changes, with enterprises shifting from relying solely on public grids to an integrated model of “self-built green power + supporting energy storage” to ensure stable and reliable power supply; third, technological routes are accelerating evolution. To improve efficiency, save space, and better accommodate new energy, the penetration rate of 800V high-voltage DC power supply architecture is expected to rise rapidly, and liquid cooling technology has become an inevitable choice for high-density computing heat dissipation.

Faced with overseas power bottlenecks, Zeng Tao believes that China has significant advantages in power supply stability and scale, green power dispatching capacity and cost, and grid infrastructure construction efficiency. First, China has the world’s largest unified grid, with ample total power supply; second, the national strategy of “East Data, West Computing” cleverly connects the east’s computing demand with the west’s rich renewable energy resources; finally, in fields such as ultra-high voltage transmission and renewable energy development, China possesses globally leading engineering capabilities and lower construction costs.

The global power shortage is driving a reconstruction of the energy infrastructure industry chain. Power demand has shifted from reliance on traditional grids to “green electricity direct supply + on-site energy storage.” Power technology is evolving toward high voltage, high efficiency, and intelligence, while the power supply chain is becoming regionalized due to overseas policies promoting localization. Zeng Tao believes this presents a historic “going global” opportunity for Chinese power equipment, new energy, and energy storage companies. Chinese enterprises need to intensify localization, precisely grasp the urgent needs of AI data centers for efficient power distribution, temperature control, and energy storage systems, and secure a favorable position in the global industry chain reconstruction.

Deepening Construction of New Power Systems

As the installed capacity of wind and photovoltaic renewable energy continues to grow rapidly, China’s new power system construction has entered a stage of in-depth tackling. Zeng Tao states that the biggest systemic bottleneck currently faced by China is the insufficient “bearing capacity” and “flexibility” of the power system. The inherent randomness and volatility of renewable energy generation conflict with the relatively stable electricity load, leading to increased pressure on grid peak regulation and frequency modulation. Some regions even face structural issues of “abandoning wind and solar” alongside “electricity shortages.”

Solving this problem depends on the intelligent and flexible transformation of the grid. Zeng Tao highlights future focus areas including building “active distribution networks” capable of massive access and intelligent control of distributed resources, promoting technologies such as flexible DC transmission, and vigorously developing “virtual power plants” that aggregate distributed power sources, energy storage, and adjustable loads. Currently, digital technologies represented by cloud computing, big data, artificial intelligence, and the Internet of Things are widely applied in grid status monitoring, fault early warning, load forecasting, and dispatch optimization.

In this context, the role of energy storage has fundamentally changed. “Energy storage has shifted from an ‘option’ to a ‘must-have’ in new power systems, playing a key role in solving renewable energy absorption, ensuring grid security, and improving efficiency,” Zeng Tao states. Domestic energy storage business models are transitioning from early single supporting modes to diversified market revenue systems composed of energy market returns, capacity compensation, ancillary services, and special subsidies. On policy, national-level special action plans have set clear installation targets for energy storage and are committed to improving market mechanisms such as capacity electricity prices.

It is worth noting that China’s energy technology and solutions are also opening broad opportunities on the international stage. In addressing global energy transition and power shortages, Zeng Tao believes China can strengthen cooperation with Europe, Southeast Asia, the Middle East, and other regions through equipment technology exports, capacity cooperation, standard alignment, and integrated investment, construction, and operation. Among these, China’s ultra-high voltage transmission technology has an irreplaceable advantage in solving long-distance, high-capacity transmission needs. The international market prospects for smart grids, renewable energy grid connection, and other integrated solutions are promising.

Emerging Investment Opportunities in High-Prosperity Sectors

Under the dual policy guidance of “steady growth” and “energy transition,” the investment focus in the power and new energy sectors is becoming increasingly clear.

Zeng Tao analyzed from a time perspective: in the short to medium term, outbound investments in grid equipment, domestic ultra-high voltage and main grid construction, and energy storage are highly certain. Global grid investments are entering a high prosperity cycle, providing Chinese competitive grid equipment companies with good opportunities to go abroad; domestic energy bases have clear export demands, and ultra-high voltage projects are continuously advancing; the global energy storage market is showing multi-point growth, especially with strong demand for large-scale storage in Europe and America and industrial and commercial storage, while domestic independent energy storage business models are continuously improving.

In the long term, wind power, AI data center energy infrastructure, energy digitalization and intelligence, and frontier fields like space photovoltaics are expected to maintain high prosperity. For wind power, China is expected to maintain high installed capacity during the 14th Five-Year Plan period, with accelerated industry chain export; the explosion of AI computing power will continue to drive demand for supporting energy infrastructure such as power distribution, temperature control, and energy storage; the value of energy digitalization formats like virtual power plants and power market trading platforms will become increasingly prominent; the demand for space photovoltaic technologies like flexible solar wings, driven by developments in low-earth orbit satellite constellations, presents broad prospects.

In specific fields, Zeng Tao believes that data center energy infrastructure driven directly by AI computing power demand currently has high investment value. Meanwhile, rapid technological updates in 800V high-voltage DC, solid-state transformers, and liquid cooling also warrant ongoing investor attention.

From an investment strategy perspective, Zeng Tao prefers to focus on leading companies in each subfield. “Leading companies have comprehensive advantages in technology R&D, branding, cost control, especially in going abroad, with stronger risk resistance and profitability certainty.” He believes that under the industry’s pursuit of high-quality development and the trend of “countering internal competition,” the advantages of leading companies are expected to further consolidate. Additionally, growth-oriented companies that achieve breakthroughs from zero to one in disruptive new technologies are also worth attention and continuous tracking.

(Source: China Securities Journal)