AsianFin -- For decades, China had grappled with chronic power shortages, with frequent blackouts persisting even into the 1990s despite grid upgrades.
The turn of the century marked a transformation—ultra-high voltage (UHV) projects and nationwide grid interconnection by 2011 boosted reliability above 99%, making outages rare for households.
Yet a fresh crisis looms: the explosive growth of artificial intelligence (AI) and data centers threatens to strain the system anew, with electricity demand from these sectors projected to double within five years, according to predictions made at the 2025 China Development Forum that brought together business leaders including Apple CEO Tim Cook
Similarly, analysts at the Bloomberg New Energy Finance (BNEF) Beijing Summit in March 2025 forecast that electricity demand from data centers alone will double in China by 2030. This surge in energy consumption is linked to China's growing AI sector and the increased reliance on data centers to support it.
In the past two years, as AI has spread across industries, energy consumption predictions have ramped up. Bloomberg New Energy Finance estimates that by 2024, China's data centers demanded a total of 20 GW of electricity, a figure expected to double to 40 GW by 2030 and reach 63 GW by 2035.
This will account for 3.2% of the nation's total electricity consumption, a seemingly small percentage that has a substantial impact due to the intense, localized power demands of data centers and the power grid instability they can cause.
Zhao Yong, Director of the Energy Research Institute at China Huaneng Group Co., Ltd., suggests that AI-driven industries could account for over 10% of China's total electricity consumption by 2035, intensifying pressure on the country's energy infrastructure.
This would necessitate categorizing AI and its related industries as high-energy-consuming sectors, making them part of the group of China's nine major energy-intensive industries.
Meanwhile, China's dual-carbon goals, which aim to reduce carbon emissions, are prompting a surge in wind and solar energy installations. By 2024, the combined installed capacity of wind and solar power is expected to surpass that of coal power.
Yet, these renewable energy sources are intermittent, and a lack of sufficient energy storage presents risks of volatility. Moreover, other emerging sectors like electric vehicles, robotics, and cryptocurrency mining also contribute to rising electricity demand, making it harder to meet the nation's environmental targets.
Despite these concerns, Li Xiuquan, Deputy Director of the Artificial Intelligence Center at the Institute of Scientific and Technical Information of China, believes there is no immediate risk of power shortages in China's current electricity supply system. However, he stresses that managing the overall surge in energy demand from AI will be a critical challenge in the future.
To mitigate the pressure that data centers place on the power grid, experts suggest strategic solutions. Lü Jinghong, an intelligent mobility analyst at BloombergNEF, argues that the location of data centers plays a pivotal role in easing electricity demand. Following the 「Eastern Data, Western Computing」 strategy, China has concentrated its national computing hubs in the western provinces, which benefit from natural cooling resources and abundant wind and solar power.
Wu Libo, Deputy Director of the Big Data Research Institute at Fudan University, emphasizes the importance of balancing electricity demand with the growing need for computing power. Despite the current regional disparities, the western provinces are expected to become new hotspots for data centers. However, challenges like high transmission costs and security risks need to be addressed.
In light of these pressures, policymakers are working on regulations to help manage energy use. For example, the "2024 Action Plan for Green and Low-Carbon Development of Data Centers" issued by National Development and Reform Commission focuses on energy efficiency and the use of renewable energy. Aiming for specific goals by 2025 and 2030, it encourages data centers to prioritize green power sources and supports their expansion in regions rich in renewable energy.
The "Guidelines for the Construction of National Data Infrastructure" officially released on January 1 also proposed to encourage the construction of high-energy-efficiency data centers in regions rich in green electricity resources.
On March 18, the National Development and Reform Commission, the National Energy Administration, the Ministry of Industry and Information Technology, the Ministry of Commerce, and the National Data Bureau jointly issued the "Opinions on Promoting the High-quality Development of the Green Power Certificate Market for Renewable Energy", emphasizing the need to accelerate the increase of the proportion of green power consumption in key energy-consuming units and industries such as data centers.
By 2030, in principle, it should not be lower than the average level of the national total renewable energy power consumption responsibility weight; the proportion of green power consumption in newly built data centers at national hub should be further increased on the basis of 80%.
