Summary of Key Points
The two largest power grids in the world, State Grid (serving 1.1 billion people) and Southern Power Grid (serving 273 million people), have shifted from primarily engaging in project-based cooperation (such as building cross-regional transmission lines) to a new level of systemic coordination. This transition encompasses comprehensive collaboration across planning, market strategy, technology, and engineering efforts. The aim is to implement the national requirements for a new energy system and a unified national electricity market, addressing the challenges posed by the large-scale integration of renewable energy sources. The ultimate goal is to optimize the allocation of electrical resources nationwide, enhance energy security, and support the development of the digital economy and advanced productivity. Additionally, an investment of 5 trillion yuan will drive the upgrading of the industrial chain towards higher-end and more digitally integrated solutions.
Detailed Explanation
1. The Relationship Between the Two Power Grids: From Separate Operations to Joint Planning
In the past, the two grids operated in separate regions (State Grid covering 26 provinces and autonomous regions, Southern Power Grid covering 5). Although there were physical connections between them (such as the Min-Yue power link), cooperation was often ad hoc, mainly focused on ensuring power supply during cross-regional shortages. Now, the approach has changed:
- Expanded Scope of Collaboration: Cooperation is no longer limited to individual projects but is now aligned with the 14th Five-Year Plan, encompassing new types of power grids, a unified national market, and technological innovation.
- Deepened Level of Cooperation: The focus has shifted from physical connections (such as building transmission lines) to the establishment of common market rules and joint planning for the future layout of the power grid.
Why this change? A unified national electricity market requires consistent regulations, and the large-scale development of renewable energy necessitates cross-regional power transmission. Redundant construction would be inefficient; therefore, coordinated efforts can make the 5 trillion yuan in investment more effective.
2. Energy Security: From Regional Self-Sufficiency to National Resource Sharing
Previously, each region relied on its own resources to meet electricity needs (for example, Guangdong would try to secure power independently when in short supply). Now, the approach is to share resources across the country:
- Improved Emergency Response: During peak demand periods, such as the summer of 2026, central and southern regions supplied 1.08 billion kWh of electricity to Guangdong. During national peak times, cross-regional power transmission reached 278 million kW, equivalent to half of Guangdong's consumption.
- Reduced Need for Redundant Power Generation: Different regions have varying peak demand times and renewable energy production patterns (for example, more wind and solar power in the northwest during the day, higher demand in the east at night). By coordinating efforts, these differences can be balanced, eliminating the need for redundant power generation facilities and saving costs.
3. Renewable Energy: From Local Waste to National Transportation
China's renewable energy resources (mainly wind and solar in the northwest and hydropower in the southwest) do not match electricity demand in the eastern and central regions. In the past, excess renewable energy might have been wasted. Now, coordinated efforts ensure that these resources are efficiently transmitted:
- Improved Cross-Regional Transmission Networks: Channels such as the Min-Yue power link and the Jiangcheng DC line facilitate the rapid delivery of renewable energy to the east.
- Unified Market Rules: Cross-regional trading has become more feasible, allowing renewable energy plants to sell their electricity nationwide. For example, wind power from the northwest can now be sold in Guangdong, increasing its utilization rate.
4. The Integration of Six Networks: Power Grids as the Foundation for the Digital Economy
The discussions mentioned the integration of six networks (power grids, water supply networks, computing networks, communication networks, underground infrastructure networks, and logistics networks), with power grids playing a central role:
- All Networks Depend on Electricity: Data centers and 5G base stations require stable power supply. Power grids must be planned in conjunction with these other networks; for example, data centers can be built near areas with renewable energy sources, benefiting both the environment and costs.
- Power Grids as Platforms: Power grids are evolving from mere electricity providers to facilitators of the digital economy. Southern Power Grid plans to establish a six-network service system covering five provinces by 2030 to support new industrial clusters.
5. The 5 Trillion Yuan Investment: More Than Just Building Lines
The two power grids plan to invest approximately 5 trillion yuan over the 14th Five-Year Plan period (with the actual amount likely being higher). This investment is not just for purchasing equipment:
- Changed Beneficiaries: The focus is on solutions that enable the efficient generation, transmission, and regulation of renewable energy, such as smart dispatch systems using AI, energy storage facilities, and advanced power technologies.
- Economic Impacts: In the first half of this year, the two grids invested 2.2 billion yuan daily, directly benefiting upstream steel and cable manufacturers, midstream equipment manufacturers, and downstream digital technology companies.
In Summary
The collaboration between the two power grids represents a significant shift towards more efficient allocation of national electrical resources. It addresses the issue of renewable energy waste, enhances energy security, and supports the development of the digital economy. Ultimately, this initiative aims to build a strong energy nation, providing citizens with stable and affordable green electricity.