China’s grid capex to recover in 2023
This is due to the rise of renewables capacity.
Grid capital expenditure (capex) in China is expected to pick up in 2023, growing by 2.2% year-on-year, after lagging behind the 22% growth in power generation capex, according to a report by CreditSights.
CreditSights expect grid capex, including power storage, to increase over the next few years on the back of the rise of renewable capacities as they would require additional ultra-high voltage (UHV) and local transmission, and power storage facilities.
“As a result, we do not expect the Chinese utilities companies under our coverage to significantly deleverage in 2023 and 2024,” the report read.
“However, we expect these state-owned utilities companies to continue to enjoy favourable funding access for their power/grid projects and maintain sound liquidity and debt servicing capacity,” it added.
China’s grid capex had been muted from 2018 to 2020 following the completion of the 21 UHV transmission projects in the previous years.
Capex in power generation, meanwhile, remained elevated due to the expansion of renewable projects such as large hydro and offshore wind.