Conventional grid investment likely under pressure, while UHV tenders become a structural bright spot

Overview

The report updates domestic grid investment in China, State Grid’s third batch of power transmission and transformation equipment tenders, and progress on the third and fourth batches of UHV equipment tenders. Grid investment still achieved slight growth in the first half, but the past two months were significantly weaker than historical seasonality; conventional power transmission and transformation equipment tenders also weakened. In contrast, UHV project approvals, construction backlog, and tender value performed strongly, forming the main growth highlight for the industry.

Core views

First, domestic grid investment momentum has weakened at the margin: investment fell 30% and 18% year-on-year in May and June, respectively, but cumulative growth from January to June was still 4% year-on-year. Second, State Grid’s third batch of power transmission and transformation equipment tender value declined 18% year-on-year, bringing the cumulative value of the first three batches down 5% year-on-year, with primary equipment and secondary equipment down 5% and 2% year-on-year, respectively. Third, UHV remains in a relatively strong construction cycle, with year-to-date approval and construction-start progress broadly in line with expectations for four new lines to be approved for the full year, and about seven or more lines under construction. Fourth, at the individual stock level, market share changes are mixed: Sieyuan gained modest share in GIS and circuit breakers, but faced pressure in other categories; NARI Tech performed well in network system integration and relay protection, but its share in SVC/STATCOM and third-batch UHV converter valves declined.

Analysis framework

The report combines monthly grid investment and power generation data, State Grid tender values by batch, UHV project approvals and construction-start progress, and compares the winning bid value and market share of major manufacturers by equipment category historically and year-to-date 2026, in order to assess industry conditions and companies’ relative competitiveness.

Methodology notes

• Industry cycle analysisYear-on-year growth and seasonality comparison

  Identify changes in investment momentum through cumulative and single-month year-on-year growth rates

  Compare 2026 grid investment, power generation investment, and power generation with the same period last year and historical seasonality to distinguish cumulative growth from recent marginal weakening.

• Order analysisTender tracking by batch

  Use State Grid tender value by batch to measure equipment demand

  Compare tender values for power transmission and transformation equipment and UHV equipment in the third batch and year-to-date, and include the pending fourth batch of UHV tenders in the forward-looking assessment.

• Competitive landscape analysisMarket share analysis by equipment category

  Compare changes in manufacturers’ winning bid shares by equipment category

  Track winning bid value and share in categories such as GIS, circuit breakers, network system integration, relay protection, SVC/STATCOM, and converter valves to assess whether companies can continue to outperform the industry.

Asset mapping & comparison

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

• China power grid equipment industry

  Directly affected by grid investment and State Grid tender cycles

  Strengths

  UHV project approvals, construction backlog, and pending tender scale are strong.

  Weaknesses

  Conventional grid investment has slowed at the margin, and the first three batches of power transmission and transformation equipment tenders declined year-on-year.

  Comparison

  UHV conditions are significantly stronger than conventional power transmission and transformation equipment.

  Risks

  Investment continues to fall below seasonality, project approvals or tenders are delayed, and orders become concentrated in a few equipment categories.

• Sieyuan

  Major power grid equipment supplier and participant in State Grid tenders

  Strengths

  GIS share rose from 17% to 18%, and circuit breaker share rose from 18% to 22%; share gains in UHV and EHV offer potential growth room.

  Weaknesses

  Shares declined in multiple categories including disconnectors, instrument transformers, arc-suppression coils, capacitors, and relay protection.

  Comparison

  Some core categories performed better than the company’s own 2025 level, but overall share gains are not broad-based.

  Risks

  Market share upside may be limited, making it difficult to continue outperforming industry growth.

• NARI Tech

  Supplier of secondary equipment, system integration, and UHV converter valves

  Strengths

  Network system integration share rose from 18% to 30%, and relay protection share rose from 31% to 32%, maintaining leadership.

  Weaknesses

  SVC/STATCOM share fell from 48% to 28%, and third-batch UHV converter valve share was only 18%.

  Comparison

  Network system integration and relay protection improved, but other key categories declined, leaving overall share broadly stable.

  Risks

  If its winning share in fourth-batch converter valve tenders does not recover, the transmission of UHV tender growth to the company may be weaker than the industry.

Key data

• Domestic grid investment in the first halfUp 4% year-on-yearSingle-month May and June fell 30% and 18% year-on-year, respectively, with recent performance weaker than normal seasonality.
• Power generation investment in the first halfFlat year-on-yearPower generation increased 5% year-on-year over the same period.
• Third batch of power transmission and transformation equipment tender valueDown 18% year-on-yearDrove the cumulative tender value of the first three batches down 5% year-on-year.
• First three batches of primary equipment and secondary equipment tendersDown 5% and 2% year-on-year, respectivelyBoth categories showed a relatively weak trend.
• Ganjiang-to-Gannan UHV lineInvestment of RMB7.2 billion and total length of about 600 kilometersThe line was officially approved on August 4, 2026.
• Year-to-date UHV project progressTwo approved and two started constructionBroadly in line with expectations for four new lines to be approved for the full year.
• Third batch of UHV equipment tendersRMB10.9 billionUHV is the main bright spot in current grid equipment demand.
• Pending fourth batch of UHV equipment tendersRMB29.0 billionIncluding this batch, year-to-date tender value would be 2.6 times the full-year 2025 level and higher than full-year 2023.
• Sieyuan’s GIS market share18%A slight increase from 17% in 2025.
• Sieyuan’s circuit breaker market share22%Up from 18% in 2025.
• NARI Tech’s network system integration market share30%A significant increase from 18% in 2025.
• NARI Tech’s third-batch UHV converter valve market share18%Below its historical market share of about 50%; the fourth-batch winning results remain to be seen.

Impact & implications

Industry demand is clearly diverging: conventional grid investment and power transmission and transformation equipment tenders are slowing, which may pressure short-term order growth for related companies; the UHV construction cycle, however, is expected to provide an offset through new approvals, numerous lines under construction, and large pending tender projects. At the company level, share gains in individual categories alone may not be enough to sustain outperformance versus the industry, and future earnings upside will depend more on UHV and EHV share, second-brand expansion, and fourth-batch tender results.

Risks

• Domestic grid investment remains weaker than historical seasonality, and cumulative growth declines further.
• State Grid’s subsequent conventional power transmission and transformation equipment tender value continues to decline.
• The scale, timing, or equipment allocation of the fourth batch of UHV tenders differs from announcements.
• UHV project approvals and construction-start progress fall short of expectations.
• Sieyuan and NARI Tech lose further market share in key equipment categories.
• The year-to-date 2026 data in the report is not yet full-year data, and cross-year comparisons may be affected by tender batches and confirmation timing.

What to watch

• Whether domestic grid investment can recover to normal seasonal levels in the second half of 2026.
• State Grid’s fourth batch and subsequent conventional power transmission and transformation equipment tender values.
• The implementation timing and equipment category allocation of the RMB29.0 billion fourth batch of UHV equipment tenders.
• Whether the number of newly approved UHV lines for the full year can reach four.
• Construction and equipment delivery progress for about seven or more UHV lines under construction.
• NARI Tech’s winning share in fourth-batch converter valve tenders.
• Sieyuan’s share gains in UHV, EHV, and second-brand businesses.