China's AI power play: Cheap electricity from world's biggest grid

Push for power supremacy transforms Inner Mongolia; tech leaders worry about U.S.-China ‘electron gap’

- Raffaele Huang & Brian Spegele

China now has the biggest power grid the world has ever seen.

(REUTERS)

THE U.S. invented the most powerful artificial-intelligence models and controls access to the most advanced computer chips, but China has an ace to play in the global AI contest.

China now has the biggest power grid the world has ever seen. Between 2010 and 2024, its power production increased by more than the rest of the world combined. Last year, China generated more than twice as much electricity as the U.S. Some Chinese data centers are now paying less than half what American ones pay for electricity.

“In China, electricity is our competitive advantage,” Liu Liehong, head of China’s National Data Administration, said in March.

The push for power supremacy is transforming remote expanses of Inner Mongolia, a Texas-like landscape of wide-open spaces now dotted with thousands of wind turbines and crisscrossed by transmission lines. They provide electricity for what officials describe as a new “cloud valley of the grasslands,” with more than 100 data centers in operation or on the way.

That is just the beginning. Morgan Stanley forecasts that China will spend some $560 billion on grid projects in the five years through 2030, up 45% from the previous five years. Goldman Sachs predicts that by 2030, China will have about 400 gigawatts of spare capacity, about three times the world’s expected data-center power demand at that time.

The U.S.-China “electron gap,” as OpenAI now calls it, has become a major preoccupation for American tech leaders. Microsoft Chief Executive Satya Nadella has said his company is worried it won't have enough power to run the enormous number of chips it is buying. Some companies want Washington to do more to cut red tape or provide financial support to modernize America’s power grid.