CICC (China International Capital Corporation) has released a research report indicating that the power equipment industry is expected to show stable and upward performance in 2026, urging investors to focus on structural opportunities.

In the traditional power grid sector, the "15th Five-Year Plan" for a new energy system defines the grid's role as "adapting to a high proportion of new energy," coupled with the release of the State Grid's "15th Five-Year" investment plan, making long-term grid investment promising. Additionally, the accelerated pace of global AI data center infrastructure construction is driving strong demand for related power equipment. Chinese power equipment companies are well-positioned to secure orders by leveraging advantages such as short delivery cycles, cost-effectiveness, and reliable after-sales service.

Strategic Focus 1: Sustained New Energy Development Driven by Carbon Peak Targets, with Optimism for Accelerated Ultra-High Voltage Approvals and Distribution Network Investment

Under the carbon peak target, CICC believes that new energy will continue to grow, and it is optimistic about the accelerated approval of Ultra-High Voltage (UHV) projects and increased investment in distribution networks. The firm suggests that domestic UHV projects are likely to enter a phase of accelerated construction during the "15th Five-Year Plan" period. The core logic has evolved from simply "enabling long-distance power transmission" to the broader goals of "supporting the delivery of new energy bases, building a unified national electricity market, and enhancing grid resilience." With new energy installations expected to persist under the carbon peak goal, the resulting demand for grid integration will require sustained increases in grid investment. Significant investment potential remains in both UHV main grids and distribution networks, whether for centralized large-scale base development or distributed energy connections.

Strategic Focus 2: Long-Term Overseas Power Investment Cycle, Accelerating the Global Expansion of Domestic Gas Turbine and Power Transmission Equipment Manufacturers

On the one hand, CICC believes that reforms in large-load grid integration will place greater emphasis on the total lifecycle value of data centers' self-owned on-site power generation, which is favorable for behind-the-meter power generation needs like gas turbines. On the other hand, overseas grid capital expenditure plans are being raised. Factors such as energy transition on the generation side, the upgrade of aging power grids, and changes on the demand side, including data centers, are continuously driving a long-term cycle of global power grid investment. This creates strong demand for power equipment. Given that foreign manufacturers maintain high order backlogs and supply bottlenecks remain difficult to resolve in the short term, Chinese companies have a historic opportunity to expand overseas, with significant room to increase their market share abroad.

Risk Warnings

Risks include grid investment falling short of expectations, new energy installations underperforming forecasts, changes in international trade policies, and exchange rate fluctuations.