China’s State Grid Investment of 4 Trillion Yuan Sparks Over 6% Surge in Power Grid ETF (561380)

China’s State Grid Corporation is set to catalyze significant investment in the energy sector, with plans to reach a total investment of 4 trillion yuan during the 14th Five-Year Plan period. This marks a 40% increase compared to the previous plan, aimed at expanding effective investments that support the high-quality development of the new power system and its associated supply chains.

As the domestic grid construction accelerates, and with ongoing electricity shortages in North America, the grid equipment sector continues to benefit from favorable conditions. The Grid ETF (561380) opened with a surge of over 6%, attracting significant capital inflow, with net investment exceeding 500 million yuan over the past five days.

On January 15, the State Grid Corporation announced its ambitious investment plans, highlighting that asset investments will significantly contribute to infrastructure development. According to Huachuang Securities, while the State Grid primarily reports data on its grid investments, fixed asset investment figures are less frequently published. Historical data shows that in 2021, fixed asset investments and grid investments were approximately 497.2 billion yuan and 473 billion yuan, respectively, indicating a close correlation between the two. Furthermore, during the current plan period, the fixed asset investment is projected to grow by 40%, compared to an investment of about 2.77 trillion yuan during the previous five-year plan, with a comparable growth rate of 16.4%.

Recent policy announcements have further bolstered grid investments. In December 2025, a meeting of the State Grid’s leadership emphasized the need to implement national policies aimed at expanding domestic demand, leveraging the foundational support of the grid for investment-driven growth. Additionally, the National Development and Reform Commission and the National Energy Administration released guidelines advocating for increased grid investment to support strategic national initiatives.

The ongoing global electricity shortages underscore the urgency for enhanced power infrastructure. The rapid advancements in technologies such as AI, big data, and cloud computing have led to exponential growth in global data traffic, resulting in a sharp rise in energy consumption in data centers. It is projected that by 2030, electricity consumption by data centers alone will account for over 8% of global electricity demand.

According to estimates from the EIA, the demand for electricity in data centers is expected to surpass 1700 TWh by 2035, representing four times the demand in 2024 and significantly outpacing current grid and generation capacity expansions. This demand surge is set to exacerbate the global electricity shortfall.

Looking ahead to 2026, major global internet companies are expected to continue investing heavily in AI infrastructure, which will drive sustained demand for computing power reliant on electricity. Key components such as transformers, switchgear, HVDC/UPS, and PSUs are anticipated to benefit from this trend.

Market analysts remain optimistic about the performance of the grid sector and suggest closely monitoring the Grid ETF (561380). Based on EIA forecasts, demand from data centers is projected to increase by over 150% from 2023, with AI-driven facilities accounting for 9% of the total electricity load in the U.S., leading to a 14 GW capacity shortfall. This demand will significantly stimulate the market for power grid equipment.

The Grid ETF (561380) tracks the Hang Seng A-Share Grid Equipment Index (HSCAUPG), which comprises listed companies primarily involved in the grid equipment sector, reflecting the overall performance of the industry. Investors should note that any mention of specific stocks is for reference only and does not constitute investment advice.

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