AI data centers drive energy storage and grid investment; J.P. Morgan is bullish on China's utilities and new energy value chain

Overview

This is a J.P. Morgan Global China Summit panel discussion note on the role of ESS and power infrastructure in the AI race. The report presents a positive view on China's utilities and renewable energy value chain, centered on China's energy storage growth, incremental AIDC power load, grid upgrades, Asia-Pacific nuclear energy security, and observations from new energy industry meetings.

Core views

The core view is that the high power density and peak loads brought by AI data centers will significantly increase the importance of energy storage and power grid infrastructure; China's ESS installations still have strong growth momentum driven by policy, peak-valley electricity pricing, and capacity fee mechanisms; aging global grids require large-scale upgrades to accommodate AIDC, electrification, and renewables; and nuclear power is regaining importance in Asia-Pacific amid energy security concerns. The report identifies Sungrow, Orient Cable, Deye, Goldwind-H, TGOOD, and Wasion as key OW names.

Analysis framework

The report uses a conference takeaway and thematic investment analysis approach, combining macro themes such as AIDC deployment, energy transition, and energy security with energy storage returns, grid investment cycles, renewable policy clarity, and ratings on covered companies to form judgments on the industry value chain and key stocks.

Methodology notes

• Thematic investment frameworkAI power infrastructure value chain

  AIDC power load drives energy storage and grid upgrades

  AIDC rack power density is materially higher than that of traditional data centers, creating peak load, grid connection, and electricity cost pressure; therefore, energy storage, grid intelligence, and demand-side management become critical infrastructure.

• Project return frameworkEnergy storage IRR improvement framework

  Peak-valley pricing and capacity fees improve returns on standalone ESS projects

  The report believes electricity price liberalization and ESS capacity fees can improve returns on standalone energy storage, raising project IRR from about 4%-5% to above 10%, with some high-quality locations potentially reaching 20%.

• Regional comparison frameworkAsia-Pacific nuclear power competitiveness comparison

  Differentiated advantages of China and South Korea in the nuclear power supply chain

  South Korea's advantages lie in international certification and project delivery, while China's advantages lie in cost competitiveness and supply chain scale; however, nuclear power decisions are still affected by geopolitics, safety agreements, long-term fuel supply, and technology pathways.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sungrow - A (300274.SZ)

  Core OW name in energy storage and renewable energy value chain

  Strengths

  Benefits from growth in China's ESS installations, AIDC energy storage demand, and renewable grid-connection demand.

  Weaknesses

  This note does not provide company-level earnings forecasts, target price, or order breakdown.

  Comparison

  Like Deye, it is exposed to the energy storage and new energy equipment upcycle, but the report does not provide a detailed inter-company comparison.

  Risks

  Energy storage price competition, slower-than-expected implementation of policy return mechanisms, and slower-than-expected realization of AIDC demand.

• Deye - A (605117.SS)

  OW name related to energy storage and distributed energy

  Strengths

  Can benefit from distributed ESS demand and China's energy storage shifting from policy-driven to value-driven.

  Weaknesses

  The report lacks company-level financial data and target price support.

  Comparison

  Alongside Sungrow, it reflects the strength of the energy storage cycle, but may be more tilted toward distributed applications and the product side.

  Risks

  Volatility in distributed ESS demand, timing of overseas and Southeast Asia orders, and intensified industry competition.

• Orient Cables - A (603606.SS)

  OW name in offshore wind and power infrastructure

  Strengths

  Benefits from improved policy clarity for offshore wind in China and demand for renewable energy integration.

  Weaknesses

  Utility-scale projects have long order-to-delivery cycles, and cost pass-through may be slow.

  Comparison

  Compared with energy storage equipment companies, it is more directly exposed to offshore wind and power transmission infrastructure cycles.

  Risks

  Offshore wind approval and construction pace, raw material costs, and project delivery delays.

• Goldwind - H (2208.HK)

  OW name in the wind power value chain

  Strengths

  Benefits from renewable energy deployment and improved policy clarity for offshore wind in China.

  Weaknesses

  The report notes that power market liberalization may hurt wind farm operators, so industry returns still need to be monitored.

  Comparison

  Compared with Orient Cables, Goldwind has more exposure to wind turbines and wind power operations.

  Risks

  Wind power price competition, market liberalization compressing returns, and installation pace falling short of expectations.

• Qingdao TGOOD Electric (300001.SZ)

  OW name related to power equipment, charging, and smart grids

  Strengths

  AIDC, electrification, and grid upgrades drive demand for smart grids, demand-side management, and efficiency improvements.

  Weaknesses

  The report does not provide company-level details on orders, margins, or valuation.

  Comparison

  Compared with energy storage names, it is more oriented toward grid and electricity-demand-side infrastructure investment opportunities.

  Risks

  Grid investment pace, project tender pricing, and realization of the demand-side management business model.

• Wasion Holdings Ltd - H (3393.HK)

  OW name in smart metering and grid digitalization

  Strengths

  Benefits from themes of smart grid technology, demand-side management, and improved grid efficiency.

  Weaknesses

  The report does not disclose a target price or company-level growth breakdown.

  Comparison

  Like TGOOD, it benefits from grid upgrades, but is more focused on metering, digitalization, and power data management.

  Risks

  Grid digitalization investment coming in below expectations, tender competition, and uncertainty in overseas market expansion.

Key data

• China cumulative ESS installations144GW in 2025, expected 450GW in 2030Equivalent to about 25% CAGR for 2025-2030.
• Standalone ESS project IRRImproves from 4%-5% to above 10%, with some high-quality locations reaching 20%Mainly driven by liberalization of peak-valley electricity pricing and ESS capacity fee policies.
• AIDC rack power density60-200+kw/rack, versus about 5-8kw/rack for traditional data centersHigher power density brings peak load and grid connection pressure.
• AIDC energy storage TAMMay expand 15-20x by 2030Starting from a low base, with demand coming from peak shaving, load smoothing, and electricity cost optimization.
• AIDC electricity cost optimization potentialUp to about 30%Energy storage can be used to reduce electricity costs.
• Grid upgrade demandGlobal trillion-dollar scale, Southeast Asia hundreds of billions of dollarsChina remains the largest single market.
• Key OW namesSungrow, Orient Cable, Deye, Goldwind-H, TGOOD, WasionThe report identifies these companies as key favored names within its coverage universe.
• New energy trends observed at the conferenceRising distributed ESS demand in Southeast Asia, slower cost pass-through in utility-scale ESS, improved policy clarity for offshore wind in China, power market liberalization suppressing wind operators, and anti-involution consolidation in polysilicon still requiring timeBased on discussions during the Global China Summit.

Impact & implications

The investment implication is that AI computing infrastructure benefits not only data centers themselves, but also infrastructure segments such as energy storage systems, grid equipment, smart meters, offshore wind, and renewable energy integration. If electricity pricing mechanisms, capacity fees, and grid investment are implemented, the economics of energy storage projects and orders for power equipment could gain medium- to long-term support; however, policy execution, cost pass-through, grid connection progress, and order realization still need to be verified across subsectors.

Risks

• If electricity price liberalization, capacity fees, and energy storage return mechanisms are implemented slowly, improvement in standalone ESS IRR may fall short of expectations.
• AIDC energy storage demand is still at an early, low-base stage, and the 15-20x TAM expansion depends on data center deployment, grid connection conditions, and electricity cost assumptions.
• Grid upgrade investment is massive, with risks related to approvals, financing, construction cycles, and regional policy differences.
• Liberalization of utility power markets may compress returns for wind farm operators.
• Nuclear power expansion is affected by geopolitics, safety agreements, long-term fuel supply relationships, and technology pathway choices.
• Cost pass-through in utility-scale ESS is slow, and long order-to-delivery cycles may affect margins.
• Anti-involution efforts and industry consolidation in polysilicon still require time, and pricing and supply pressures may persist.

What to watch

• The pace of implementation for China's peak-valley electricity pricing liberalization and ESS capacity fee policies.
• The speed at which China's cumulative ESS installations progress toward the 450GW target by 2030.
• Deployment scale, grid connection progress, and changes in electricity costs for AIDC in China, developed markets, and Southeast Asia.
• Grid upgrade investment, smart grid tenders, and demand-side management project implementation in China and Southeast Asia.
• Policy clarity, approvals, and installation pace for offshore wind in China.
• Approval of Asia-Pacific nuclear projects, international certification, fuel supply agreements, and supply chain competition between China and South Korea.
• Cost pass-through in utility-scale ESS, returns for wind farm operators, and progress in polysilicon industry consolidation.