China's power edge brings mixed AI blessings

China generates far more electricity than the United States and industrial power costs are lower, but Reuters reports that transmission bottlenecks, underused data centres and limits on high-end chips mean the power advantage has not yet produced clear AI leadership.

China has abundant and relatively cheap electricity that underpins data centres and AI ambitions. Reuters reports the country generated over 10,000 terawatt-hours in 2024, more than double the United States. Industry figures have highlighted an "electron gap" that could shift AI dynamics. At the same time, analysts caution that several technical and market constraints have so far limited the payoff from that power advantage. Key facts: - China generated over 10,000 TWh of electricity in 2024, reported energy think tank Ember, which is more than double U.S. output. - Wood Mackenzie estimates renewables could produce about 5,500 TWh by 2030, while forecast data-centre demand is around 479 TWh for that year, according to Reuters summarising the consultancy. - The United States faces grid constraints and analysts at Morgan Stanley estimate a 44-gigawatt shortfall for data-centre power between 2025 and 2028, Reuters reports. - China has lower industrial power costs on average, cited as about 30% cheaper than in the United States by Bank of America analysts. - Operational limits persist: solar curtailment rose to 6.6% in the first half of 2025 and reached much higher rates in some regions, and many data centres built in western provinces have low utilisation rates, sometimes near 20%, Reuters reported. - Bernstein and other analysts say U.S. chip export controls and the shortage of high-end processors remain constraints; Bernstein estimated Chinese AI capital expenditures could be about $147 billion in 2027. Summary: China's large and relatively low-cost power supply creates potential capacity for AI workloads, but physical transmission limits, renewable curtailment and constraints on high-end chips have so far limited the translation of that advantage into broader AI leadership. Beijing is expanding high-voltage transmission, energy storage and a west-to-east power program targeting more than 420 GW by 2030 to ease bottlenecks. At the same time, analysts note signs of overcapacity and intense price competition across parts of the AI stack, which could affect returns and industry structure in coming years.