# Power Infrastructure Upgrade Cycle Has Arrived

The power infrastructure upgrade cycle is here. According to the latest plan, grid construction investment over the next five years will reach 4 trillion yuan, representing a 40% increase compared to the previous five-year plan. Looking at it from another angle: that's approximately 800 billion yuan per year, or roughly 2.2 billion yuan invested in the grid daily. An investment cycle of this magnitude not only transforms the power system itself but also reallocates opportunities across the entire industrial chain.

## Ultra-High Voltage: The Absolute Core of the Industrial Chain

If we're talking about the most critical part of that 4 trillion yuan, ultra-high voltage (UHV) transmission systems are absolutely number one. The plan explicitly proposes accelerating the construction of UHV DC external transmission corridors, with inter-regional transmission capacity set to increase by over 30%. This isn't minor maintenance—it's an upgrade to the entire grid architecture.

In the UHV industrial chain, transformers and reactors are essential products. Certain enterprises have maintained market share above 30% in this sector for years while also engaging in coal and silicon material businesses; these major grid orders essentially add a new growth curve for them. In the converter transformer segment, a leading enterprise commands market share exceeding 35%, with coverage across all voltage grades from 330kV to 1100kV, having previously handled major projects like West-to-East Power Transmission and Three Gorges. There are also specialized enterprises producing DC transmission equipment with deep technical accumulation—naturally, this upgrade cycle won't leave them without orders.

## Intelligent Upgrades as the Second Half

However, construction capacity is merely the surface; the real growth point lies in intelligence. The grid not only needs to be built faster but also smarter. At the national level, there's a push to advance the "AI+" special action in power sector applications, opening new demand windows.

Certain enterprises specialize in grid automation products with market share exceeding 40%, while soft DC control equipment represents monopoly-level presence. Dispatch automation systems have achieved 75% coverage across China's domestic grid, with UHV converter valve market share surpassing 50%. Most interestingly, these companies have begun developing AI large models for the power sector, used for grid planning, operation and maintenance prediction, and new energy grid-connection stability management. The entire industrial chain—from hardware equipment to software algorithms—is upgrading.

## Distribution Networks and Overseas Expansion: Overlooked Growth Points

If UHV is the aorta, distribution networks are the capillaries—the value of the last-mile infrastructure is equally significant. The largest domestic high-voltage coil manufacturer sees transformer business overseas revenue growth accelerating to 89%. This is particularly interesting—the North American grid currently urgently needs high-voltage equipment, and Chinese enterprises have natural advantages in mass manufacturing and delivery capacity. Particularly those enterprises that have established overseas channels and hold international certifications can capture both domestic orders and expand overseas markets during this grid upgrade cycle.

There are also enterprises from the same group specializing in 1000kV ultra-high voltage transformers with deep technical reserves, also positioned to gain a share in this grid investment cycle.

## Energy Storage and Digitalization: Hidden Opportunities

The supporting policies for the 4 trillion yuan investment particularly emphasize supporting scaled development of new energy storage. While energy storage enterprises currently have few listed companies, opportunities are already emerging across the entire industrial chain. Liquid flow battery enterprises are developing low-cost stacks, while flywheel energy storage technology is beginning deployment in data centers. These tracks may seem unremarkable now, but within the five-year plan, these technologies will become essential.

On the digitalization front, enterprises producing smart electricity meters and power consumption information collection systems will experience surging demand. Grid intelligence upgrades mean every electricity consumption endpoint requires upgrading; collection system demand will explode. Some companies are developing AI digital humans for grid operations, utilizing 3D modeling and voice interaction to serve grid management—such cross-sector innovations merit attention.

## How to Capture Investment Opportunities

Some might ask whether these enterprise stocks have already climbed significantly—is there still opportunity now? The key point is that grid investment is a five-year long-cycle plan, not a speculative trend. What matters is order certainty. For instance, certain enterprises have already signed seven-year long-term contracts, making earnings certainty quite high; in such cases, stock price gains often continue.

Another signal: 2026 UHV approval and bidding processes are expected to accelerate, meaning current conditions may represent only the early stage of this market movement. Grid investment serves dual purposes: preparing for new energy transition while proactively layout for surging electricity demand in the AI era. This logic chain is very clear—the growth cycle for industrial chain companies is just beginning.