According to a research report, overseas data centers are encountering difficulties in securing adequate power supply. In congested grid areas of Europe and the United States, waiting times for connections can extend beyond seven years. Grid capacity is increasingly influencing capital allocation, with large developers focusing on Nordic, Southern European, and emerging markets. Simultaneously, self-sufficient power sources are transitioning from optional to essential in certain FLAP-D markets in the U.S. and Europe, prompting the exploration of various new power supply solutions. The pronounced imbalance between overseas supply and demand presents a window of opportunity for Chinese manufacturers to accelerate their global expansion and capture high-growth market prospects. The report recommends ongoing attention to three key investment areas with strong international potential: on-site power generation (including gas turbines), grid equipment, and solid-state transformers (SST). Key insights are outlined as follows:
On the power generation side, on-site power is becoming a prevailing trend, with breakthroughs in independent gas turbine exports. Gas turbines serve as a mainstream solution for on-site power. Global orders for gas turbines in 2025 are expected to see increases in both volume and price. However, leading international suppliers face capacity constraints, with delivery lead times exceeding three years, making it difficult to meet rapid power demand. This situation creates market entry opportunities for Chinese original equipment manufacturers. For instance, Dongfang Electric Corporation's proprietary G50 gas turbine achieved its first export last year. Additionally, alternative solutions like SOFC, SMR, and geothermal systems each offer distinct advantages. The combination of self-generation and grid power is viewed as a highly viable future direction.
On the grid side, a global major power cycle is underway, with Chinese transformer exports experiencing significant growth. As AI data center (AIDC) scales reach hundreds of megawatts, connection points are shifting to higher voltage levels requiring dedicated substations. Long-standing issues, such as slow approval processes, have hindered effective transmission development in Europe and the U.S., leading to supply gaps for critical equipment like transformers. Chinese transformer exports are projected to reach a new high in value for 2025. Chinese companies, benefiting from complete industrial chains and rapid delivery capabilities, are well-positioned to continue expanding their market presence.
On the data center side, SST technology holds promise for helping AIDCs achieve grid compatibility. On one hand, SSTs are suitable for computing-power coordination scenarios and can work in conjunction with energy storage systems to provide grid services like peak shaving and frequency regulation, enabling flexible grid interaction. On the other hand, SSTs utilize power electronics for fast response and active control, mitigating the impact of AI model training on the grid. Chinese manufacturers with strong grid expertise and robust market channels are expected to stand out in this area.
Recommended companies with strong international capabilities in grid equipment include Sieyuan Electric, IGO, Mingyang Electric, Jinpan International, Huaming Equipment, China XD Electric, and TBEA. Companies with potential for export breakthroughs include SF Electric and Dongfang Electric. Key risks include slower-than-expected AIDC development, changes in international trade policies, and shifts in new technology pathways.