Energy use, innovation driven by new infrastructure

Industry experts say China’s rapid development of new infrastructure has become a key driver of rising energy consumption, driving significant growth in sectors such as 5G, artificial intelligence and electric vehicles.

The rapid progress and deployment of new infrastructure, including 5G, big data, cloud computing, artificial intelligence and the industrial internet, have significantly boosted electricity consumption in these sectors, according to the China Electric Power Council, an industry body for power producers.

Electricity consumption for internet data services, including big data processing, cloud storage, cloud computing and internet-based cloud computing, recorded a compound annual growth rate of 28 percent between 2018 and 2023, rising by a further 33 percent in the first half of the year, according to data recently released by the council.

Liu Yongdong, deputy secretary general of the council, said a key factor behind China’s rising energy consumption is the country’s rapid economic development, which is driving up energy demand.

He added that industrial production, infrastructure projects and urbanisation also contributed significantly to the increase in electricity consumption.

Wang Lining, director of the petroleum market department at the Economic and Technology Research Institute of China National Petroleum Corp., said that as technology advances in China, the spread of digital technologies, data centers and electric vehicles are contributing greatly to the growth in electricity demand.

China is a global manufacturing hub, and industries like steel, cement and electronics are energy-intensive. The expansion and modernization of these industries have led to increased energy consumption, Wang said.

He added that the push to adopt electric vehicles to combat environmental pollution and dependence on fossil fuels has also led to an increase in demand for electricity for charging infrastructure and electric vehicle manufacturing.

Data released by the council shows that the rapid construction and expansion of charging stations for new-energy vehicles has boosted energy consumption in the charging and battery swapping services industry, which recorded an average annual growth of 79.4 percent in the first half of the year.

The growth rate of electricity consumption in this sector continued to rise, with a high 63.7 percent in the first half of the year, the China Electric Power Council reported.

Jiang Debin, deputy director of the council’s statistics and data centre, said: “The rapid expansion of these cutting-edge technologies is transforming China’s economic landscape, driving both innovation and energy demand.”

Jiang added that with a series of macroeconomic measures gradually coming into effect that further stimulate the domestic economy, China’s economy can be expected to maintain stable growth in the second half of the year, which will also contribute to the steady increase in electricity demand.

Data from the Ministry of Industry and Information Technology show that the total number of 5G base stations in China reached 3.92 million as of the end of June. The stations are expected to consume 92.8 billion kilowatt-hours of electricity per year, an increase of 23.4 billion kWh, or 33.7 percent, from the same period last year.

In the first half of 2024, electricity consumption in the high-tech and equipment manufacturing industry increased by 13.1% year-on-year, outpacing the average growth rate of the manufacturing sector by 6.2 percentage points, indicating a continuous trend of transformation and upgrading in manufacturing.

Total electricity consumption, a key barometer of economic activity, is expected to grow by about 6.5 percent year-on-year for the full year of 2024. The annual growth rate of total electricity consumption in the second half of the year is expected to be about 5 percent, the council said.