The Convergence of Energy and Technology: A Dual Engine Driving Future Development

On April 18, at the 19th China Investment Annual Conference co-hosted by Touzhong Information and Touzhong Network, Hui Hengyu from Chaoxi Capital presented a speech titled “Driving the Future: The Symbiosis of Energy Revolution and Technological Innovation.” He shared insights based on Chaoxi Capital’s practical experience and research on global energy status and technological development trends, offering new perspectives for investors and the industry.

Hui Hengyu opened his speech by thanking the organizers for the invitation and expressed his intention to discuss investment opportunities within the context of the energy revolution and technological innovation. Chaoxi Capital, established in 2015, is celebrating its 10th anniversary this year. In its first five years, the firm focused primarily on merger and acquisition investments, with over 30% in controlling investments concentrated in sectors such as lithium batteries, wind power, photovoltaics, and semiconductors. By around 2020, these projects were acquired by publicly listed companies for cash, allowing the firm to accumulate extensive industrial resources and insights.

Currently, many of our investors come from various industries and possess a wealth of experience as industrial partners, reflecting the essence of industrial capital. In 2021, we transitioned to venture capital, continuing our investments in the fields of new energy and semiconductors. To date, we have seen successful investments in companies like Laplace and Shuangyuan Technology, which are now listed on the Sci-Tech Innovation Board. Our portfolio also includes several unicorn companies in niche sectors. For instance, Haichan Energy Storage, which recently applied for a Hong Kong stock listing, is currently the world’s largest manufacturer specializing in the research and development of electrochemical energy storage cells and systems, and we are one of its largest institutional shareholders. Furthermore, Chint New Energy is the only company among the world’s top component suppliers that has yet to go public.

Since last year, we have assembled an independent overseas team to develop, construct, and hold overseas solar and storage assets, which in turn empowers our invested companies, creating a closed-loop ecosystem that promotes synergy between different industry sectors—this is a distinct feature of our industrial capital approach.

Looking ahead to the next decade, we believe that energy and technology will serve as the two main threads in the fabric of human life, complementing and enhancing one another. In the past five years, China’s new energy sector has made significant strides, becoming a global leader in lithium batteries, sodium batteries, photovoltaics, energy storage, solid-state batteries, and new energy vehicles. The flourishing of the new energy sector has greatly stimulated technological innovation, leading to the emergence of technologies such as AI, embodied intelligence, and low-altitude industries.

It is conceivable that without a continuous supply of low-carbon green energy and the ability of Chinese companies to achieve extreme cost reductions through large-scale manufacturing, these emerging technologies would not have gained such swift traction. Therefore, we see the dual-driven development of energy and technology as the underlying theme for the future.

Globally, the major challenge facing the energy sector is the imbalance and mismatch between energy supply and demand, as energy equality has yet to be realized. China, as a typical representative of developing countries, currently ranks among the highest in per capita energy consumption and has been the world’s largest energy consumer since 2010. In the future, as more countries develop like China, overall energy consumption will continue to rise, with each country having different energy endowments. For example, within China, there is a clear mismatch between energy supply and demand; the eastern regions are energy-intensive manufacturing hubs, while the western regions are major producers of new energy.

Thus, we believe that the next phase of development should focus on addressing these issues to facilitate broader innovation and application of technology, enhancing human intellectual limits and innovative potential. Currently, we are concentrating on three key development trends.

The first is the global upgrade and transformation of electrical grids. According to the International Energy Agency, it is projected that by 2030, renewable energy generation will reach 46%. Last year, renewable energy accounted for about 18% of China’s total electricity consumption. However, predictions based on Germany’s grid evolution suggest that when renewable generation exceeds 30% of the overall grid, it may face significant risks of collapse. Consequently, countries are increasing their investments in grid upgrades. This year, China’s budget for grid investment and upgrades is set at 820 billion yuan, significantly higher than the average of 500 to 600 billion yuan over the past five years, reflecting a more than 30% increase.

Grid upgrades involve work on the grid side, load side, and source side. Recently, commercial and industrial solar storage has developed rapidly as a fixed asset investment and transformation on the load side, aimed at balancing energy consumption, responding to green low-carbon energy, and reducing energy costs. On the source side, companies are transitioning from a focus on thermal power to primarily relying on renewable energy installations. The transformation of the grid to accommodate renewable energy development has become a significant theme in recent years.

From a niche perspective, the focus of upgrades is on end-use of electrical energy, improving the quality of renewable electricity, and adjusting voltage levels. Currently, many innovative companies in China are dedicated to meeting the electricity and energy needs of the grid and users. Additionally, given the intermittent and volatile nature of renewable energy, traditional electricity forecasting methods are becoming inadequate. Last year, China’s total electricity consumption was approximately 90 trillion kilowatt-hours, with a growth rate of 10%. It is estimated that by 2030, electricity consumption will exceed 150 trillion kilowatt-hours, with renewable energy consumption potentially reaching 50 trillion kilowatt-hours. This substantial volume of renewable electricity generation necessitates the use of AI technology to predict energy load and output curves, ensuring better alignment with power curves—an exemplary case of the interaction between AI technology and energy.

AI not only helps renewable energy better adapt to its characteristics and reduce costs on the load side but also drives growth in electricity consumption. In China, there has been a divergence between overall electricity consumption and GDP growth; last year, GDP grew by 5% while electricity consumption increased by 10%, with expectations that this gap will widen further, largely due to electrification and AI data centers. From a policy perspective, at the end of last month, China announced that 80% of new data centers must utilize green electricity. This not only stimulates demand for renewable energy but also creates a favorable development environment for AI applications in the energy sector. This theme is closely related to the recently released Document No. 136, which mandates that starting June 1, all renewable energy generation must participate in spot trading. Previously, China’s power generation was dominated by hydropower and thermal power, which had relatively fixed costs, making it easier to predict social electricity and energy costs. However, renewable energy generation is significantly impacted by weather and climate changes, resulting in noticeable differences between day and night generation curves. The inclusion of renewable energy as a primary supply source in the spot trading market will greatly change future electricity consumption habits.

It is estimated that by 2030, China’s renewable energy generation will reach about 50 trillion kilowatt-hours. Many companies engaged in AI large models are already working on predicting, matching, facilitating transactions, and developing strategy algorithms for this future electricity demand. Some have reported revenues exceeding 100 million yuan, with the market size in this field estimated at around 50 billion yuan, indicating tremendous growth potential.

At the same time, the development of AI and embodied intelligence also supports the advancement of renewable energy. For instance, in power inspections, traditional human-led inspections are being replaced by embodied intelligent robots that can not only identify issues with power equipment but also perform repairs directly. Inspections and maintenance of wind turbine towers and offshore wind installations, which can be challenging for human workers, may be significantly enhanced through embodied intelligent robots, liberating human time and energy for other tasks.

In battery research, such as the formulation of solid-state batteries and perovskites, utilizing embodied intelligent robots in laboratories could accelerate development processes, effectively addressing current challenges related to lifespan, energy density, and safety in production processes, thereby shortening the industrialization cycle. However, the development of embodied intelligence does face challenges in the energy realm, particularly regarding battery endurance. Many robots currently have short operational times, which do not meet the average labor intensity requirements of over 10 hours in China, making them economically unviable. Therefore, advancements in renewable energy related to lithium battery energy density, safety, endurance, and convenient charging must be integrated with embodied intelligence. Only when robot endurance aligns with human labor intensity will their applications become more widespread.

The third trend is the relationship between energy and the aerospace industry. Currently, the focus of US-China technological competition in the aerospace sector lies in “frequency and orbit grabbing,” with significant growth in the satellite industry in recent years. Most satellite payload systems currently use lithium batteries, with deployable components utilizing thin-film batteries, averaging a lifespan of 6-10 years. The application of solid-state batteries in payload systems and perovskites in deployable components could potentially double the overall lifespan of satellites, substantially reducing both manufacturing and operational costs, thus enhancing the application of satellites in communication, remote sensing, and meteorology, making the benefits of aerospace industry development accessible to the general public.

Furthermore, the emerging eVTOL (electric vertical takeoff and landing) industry primarily uses ternary lithium batteries. If solid-state batteries or hydrogen fuel cells with higher energy densities are adopted, flight times could more than double, and costs could be reduced by nearly half, facilitating the integration of more technological applications into everyday life.

In conclusion, energy and technology will remain the core investment themes for Chaoxi Capital. We firmly believe that focusing on these themes will uncover more outstanding Chinese enterprises, further promoting the mutual driving development of energy and technology. Looking ahead, the deep integration of energy and technology will become the dual engines of societal progress, continually invigorating human intellect and creating a brighter future. Thank you for your attention!