China Ramps Up Energy Boom Flagged by Musk as Key to AI Race

k8{k1adtm7bd1{e9s)r5et)d_media_dl_1.png BloombergNEF

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(Bloomberg) — New data on China’s relentless energy installations underscore warnings from Elon Musk and Jensen Huang that the nation’s world-beating power network will deliver a major advantage over the US in the race to dominate artificial intelligence. 

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Since 2021, China has added more power capacity across all energy technologies than the US has in its history, including 543 gigawatts last year, according to figures released late last month by the country’s National Energy Administration.

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China will add more than 3.4 terawatts of electricity generation capacity over the next five years, almost six times as much as the US, BloombergNEF projects under its base-case Economic Transition Scenario. That influx would give the No. 2 economy greater ability to accommodate rising power demand from data centers.

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“The limiting factor for AI deployment is fundamentally electrical power,” Musk told BlackRock Inc. Chief Executive Officer Larry Fink in an interview at the World Economic Forum on Jan. 22. “Very soon, maybe even later this year we’ll be producing more chips than we can turn on — except for China,” said Tesla Inc. CEO Musk, whose xAI is building US data centers. “China’s growth in electricity is tremendous.” 

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Musk’s comments echo similar sentiments from Nvidia Corp.’s CEO Huang, who has also identified access to electricity as a potential differentiator between the US and China. AI competitiveness can be thought of as a cake composed of five layers: energy, chips, infrastructure, models and applications, Huang told a December event hosted by the Center for Strategic and International Studies. “At the lowest level — energy — China has twice the amount of energy we have as a nation,” he said.

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In the US, data centers will account for 38% of the growth in electricity demand between 2024 and 2030, though just 6% in China, according to BNEF projections. Data centers will command almost 7% of total US power demand by 2030, compared to 2% in China.

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China, where electricity consumption hit a record last year, is continuing to rapidly add new power capacity with huge deployments of renewable sources like solar and wind alongside more coal, nuclear and gas facilities. Solar generating capacity is on track to surpass coal in China for the first time this year, though newly added renewables have lower utilization rates than fossil fuel assets.

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Growth in generation capacity is proving slower in the US, where electricity demand has recently begun surging after roughly two decades of flat growth through the early 2020s. The anticipated requirements from AI have triggered a rush of development of new gas-fired capacity, though US power plants can take years to come online as a result of more onerous regulation and supply chain bottlenecks. President Donald Trump’s opposition to renewables also means clean energy projects have been subject to cancellation or delays.