Grid Investment Slows, but UHV Remains the Only Structural Bright Spot, Goldman Sachs Says
A latest Goldman Sachs report says domestic grid investment slowed sharply in May and June 2026, falling 30% and 18% year over year, respectively.
A latest Goldman Sachs report says domestic grid investment slowed sharply in May and June 2026, falling 30% and 18% year over year, respectively. Investment for the first six months rose only 4% cumulatively, below seasonal expectations. State Grid’s third tender for transmission equipment fell 18% year over year and was down 5% cumulatively year to date.
Ultra-high-voltage (UHV) transmission was the only bright spot. The third UHV tender totaled CNY 10.9 billion, while the newly announced fourth tender reached CNY 29 billion. Combined, UHV tender volume so far this year has reached 2.6 times the full-year level in 2025. In addition, the Ganjiang–Gannan 1,000-kilovolt AC line was approved on Aug. 4. Goldman Sachs expects four new lines to be approved during the year, with progress in line with expectations. State Grid’s guidance calls for the number of UHV lines under construction during the 15th Five-Year Plan period to be twice the number during the 14th Five-Year Plan period.
The underlying logic is that demand to transmit power from large renewable-energy bases is forcing UHV construction to accelerate, while investment on the distribution-grid side is lagging because of local-government fiscal constraints. This is creating a structural split between a stronger backbone grid and a weaker distribution network.
Among key equipment suppliers, Sieyuan Electric’s share increased slightly in GIS, from 18% to 22%, and in circuit breakers, but its share declined across several other product categories. Goldman Sachs believes the company’s room to outgrow the industry is limited. NARI Technology gained share in network systems integration, from 18% to 30%, and in relay protection. However, its SVC/STATCOM share plunged from 48% to 28%. Its share of UHV converter-valve awards in the third tender was only 18%, compared with a historical level of about 50%. The outcome of the fourth tender will therefore be critical.
The market may not yet have fully priced in the earnings support that higher-than-expected UHV equipment tender volumes could provide to related manufacturers, although investors already appear to have anticipated some slowdown in overall domestic grid investment.
In summary, UHV is currently the grid sector’s strongest high-conviction theme, while supplier market-share divergence is intensifying. NARI Technology’s performance in the fourth converter-valve tender is the most important near-term swing factor, according to the report.
The report identifies UHV equipment manufacturers—including NARI Technology, Sieyuan Electric, China XD Electric and TBEA—as potential beneficiaries. The market has already anticipated a slowdown in State Grid’s overall investment, but the incremental upside from higher-than-expected UHV tender volumes may not be fully reflected, particularly if NARI Technology recovers converter-valve share. This is described as a key near-term catalyst, not a confirmed outcome.
The catalysts identified by Goldman Sachs are: the fourth UHV equipment tender, including quota allocation for converter valves and especially NARI Technology’s winning share, which is expected to be announced within the next one to two months; the pace of approvals for new lines in the second half of the year, with four lines expected for the full year and two completed so far; and whether monthly grid-investment data stabilizes and rebounds after June.
Ultra-high-voltage (UHV) transmission was the only bright spot. The third UHV tender totaled CNY 10.9 billion, while the newly announced fourth tender reached CNY 29 billion. Combined, UHV tender volume so far this year has reached 2.6 times the full-year level in 2025. In addition, the Ganjiang–Gannan 1,000-kilovolt AC line was approved on Aug. 4. Goldman Sachs expects four new lines to be approved during the year, with progress in line with expectations. State Grid’s guidance calls for the number of UHV lines under construction during the 15th Five-Year Plan period to be twice the number during the 14th Five-Year Plan period.
The underlying logic is that demand to transmit power from large renewable-energy bases is forcing UHV construction to accelerate, while investment on the distribution-grid side is lagging because of local-government fiscal constraints. This is creating a structural split between a stronger backbone grid and a weaker distribution network.
Among key equipment suppliers, Sieyuan Electric’s share increased slightly in GIS, from 18% to 22%, and in circuit breakers, but its share declined across several other product categories. Goldman Sachs believes the company’s room to outgrow the industry is limited. NARI Technology gained share in network systems integration, from 18% to 30%, and in relay protection. However, its SVC/STATCOM share plunged from 48% to 28%. Its share of UHV converter-valve awards in the third tender was only 18%, compared with a historical level of about 50%. The outcome of the fourth tender will therefore be critical.
The market may not yet have fully priced in the earnings support that higher-than-expected UHV equipment tender volumes could provide to related manufacturers, although investors already appear to have anticipated some slowdown in overall domestic grid investment.
In summary, UHV is currently the grid sector’s strongest high-conviction theme, while supplier market-share divergence is intensifying. NARI Technology’s performance in the fourth converter-valve tender is the most important near-term swing factor, according to the report.
The report identifies UHV equipment manufacturers—including NARI Technology, Sieyuan Electric, China XD Electric and TBEA—as potential beneficiaries. The market has already anticipated a slowdown in State Grid’s overall investment, but the incremental upside from higher-than-expected UHV tender volumes may not be fully reflected, particularly if NARI Technology recovers converter-valve share. This is described as a key near-term catalyst, not a confirmed outcome.
The catalysts identified by Goldman Sachs are: the fourth UHV equipment tender, including quota allocation for converter valves and especially NARI Technology’s winning share, which is expected to be announced within the next one to two months; the pace of approvals for new lines in the second half of the year, with four lines expected for the full year and two completed so far; and whether monthly grid-investment data stabilizes and rebounds after June.