China State Grid unveils 400 billion yuan push to upgrade network

China State Grid Corp will spend about 400 billion yuan (HK$504 billion) this year on its electricity networks as the country, which last month reached a deal with the United States to curtail fossil fuels, copes with an unprecedented influx of clean energy and higher demand.

Spending would need to be maintained at current levels for the next five years to accommodate higher electricity consumption and contributions from new energy sources, said Zhang Zhengling, a spokesman for the mainland's biggest power distributor.

The spending throws a spotlight on Beijing's challenge to get electricity from where it is generated to where it is needed. Already, about one in every 10 of the country's wind turbines are sitting idle because of inadequate transmission capacity.

The International Energy Agency estimates the mainland will need to spend more than US$4 trillion until 2040 to overhaul the way it transmits and distributes electricity.

"Grid investment is mainly driven by government policies," said Shi Yan, an analyst at UOB Kay Hian. "[The mainland is trying to] upgrade the networks with ultra-high-voltage and smarter technology."

The mainland's annual energy consumption surged 51 per cent from 2008 to last year and was expected to peak between 2035 and 2040, said a report earlier this year from Climatescope, a research project whose partners include Bloomberg New Energy Finance and Britain's Department for International Development.

Under last month's agreement reached with the US, China will be required by 2030 to install as much as 1,000 GW of new zero-emissions energy, exceeding the amount of coal-fired power generation the country has today.