On July 31, the State Council convened a standing meeting to focus on enhancing urban infrastructure. The meeting emphasized the need to boost investment in urban distribution networks, promote smart grid development, and accelerate rail transit construction. This marks a significant shift in national priorities, with smart grid and distribution network upgrades becoming key investment areas for the first time in recent years.
Five years ago, as part of efforts to stimulate domestic demand, the government increased its support for power grid projects. Both the State Grid Corporation and China Southern Power Grid stepped up their investments, benefiting power equipment companies that experienced strong market growth. Now, the focus is once again on strengthening urban distribution networks and advancing grid intelligence—part of broader measures to adjust the economic structure and ensure sustained growth.
This policy not only aims to enhance power supply reliability but also supports the integration of distributed energy sources like solar power, while addressing challenges from electric vehicle charging stations and fluctuating load demands. It’s a strategic move that aligns with long-term energy transition goals.
Despite progress, the task of modernizing the distribution network remains challenging. Cities like Shenzhen and Shanghai still face frequent power outages, and even in pilot cities such as Hangzhou, distribution automation coverage was only 50% as of 2013. With just 9% national coverage as of 2009, there is a clear need for continued investment and innovation.
China Southern Power Grid has already planned a total investment of 227.9 billion yuan during the 12th Five-Year Plan period for rural distribution networks, with 150.5 billion yuan allocated for 2013–2015. This represents a 33.3% increase compared to 2012, with urban distribution network investment expected to grow even faster. Similarly, the State Grid Corporation has prioritized distribution network upgrades, calling it an urgent task and publishing articles highlighting the importance of improving power supply reliability and building a modern distribution system.
With central and local governments working together, the challenges of land acquisition and power corridor issues are being addressed more comprehensively. This collaboration is expected to drive a new era of distribution network development, reducing power outage times and accommodating emerging trends like distributed generation, microgrids, and electric vehicles.
The smart grid sector is entering a growth phase, with the smart substation market projected to expand by 20–25% over the next five years. The smart power distribution market is anticipated to grow by 30%. Key players in this space include companies such as Nan Rui Ji Bao, Guodian NARI, XJ Electric, Sifang, Siyuan Electric, Jicheng Electronics, HKUST Smart, Changyuan Shenrui, and Guodian Nanzi, which are well-positioned to benefit from the rising demand for intelligent switch cabinets and high-efficiency transformers.
In addition to power grid upgrades, the conference also highlighted the importance of expanding rail transit systems, including subways and light rails. In 2012, the National Development and Reform Commission approved 609 billion yuan for rail transit projects, and recent decentralization of approval processes has led to increased activity. This year, the bidding landscape for railway projects looks promising, with NARI winning 60% of the bids for already-announced lines. There are currently 17 lines under tender, signaling strong momentum in the sector.
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