Goldman Sees China Power Push Giving It Edge Over US in AI Race

(Bloomberg) -- China’s massive buildout of power generation capacity will give it a leg up over the US in the race to expand data centers fueling artificial intelligence, according to Goldman Sachs Group Inc. 

The country has been on an electricity construction spree since it was hit by a spate of power shortages in 2021 and 2022, with world-leading rollouts of renewables, coal-burning plants and nuclear reactors. By 2030, it will likely have about 400 gigawatts of spare power capacity, triple the expected needs of the global data center fleet, giving it plenty of room to keep expanding. 

“We expect China’s spare capacity to remain sufficient to accommodate” growing power demand from data centers and other industries, Goldman analysts including Hongcen Wei wrote in a research note Thursday.

While China currently houses about a quarter of global data center capacity, it could soon catch up to the US, which leads with 44%. 

Data centers already account for about 6% of US electricity demand, and that rapid growth along with a lack of new power plant construction means that eight of the 13 regional grids are already at or below critical spare capacity levels, leaving them vulnerable to price spikes or shortages, according to Goldman. By 2030, such tightness could constrain growth in data centers, which require massive amounts of electricity to run and cool all the computing power housed within them.

“Limited effective spare power capacity could act as a bottleneck for further data center developments in the US,” the analysts said. “In contrast, China already carries significant spare capacity in its power grid, which we expect to expand further.”

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