Near the end of last year, thousands of European travellers saw their holiday plans unravel after a prolonged power outage in the Eurotunnel – the underwater train passage linking Britain and France – caused by a fault in the overhead supply.
For many, this brought back memories of chaotic scenes the previous April, when rolling blackouts struck much of Portugal and Spain. The United States also suffered from multiple power outages last year, including major disruptions in California – most recently in San Francisco, where a substation fire cut electricity to around 130,000 homes days before Christmas.
On the other side of the globe, the situation is quite different. After a series of regional outages from 2020 to 2022 – the first large-scale blackouts the country had seen in over a decade – China has maintained a stable electricity output with rare interruptions to services.
Beyond the periodic blackouts, relatively high energy costs in Europe and the US are creating another problem: meeting the increased demand generated by the industries viewed as essential for growth and dominance in advanced tech.
The massive data centres which leading artificial intelligence (AI) firms are erecting to train their new models are projected to consume enormous quantities of electric power, putting even more stress on grids already struggling to meet ordinary output levels.
Conversely, even after previous construction sprees, China is continuing to widen and deepen its energy network. New power plants, grids and other big-ticket projects are under way or in the planning stage, including a US$137bil (RM554.91bil) hydropower project on the Yarlung Tsangpo River in the country’s far western Tibet autonomous region.
“In terms of electricity capacity, the differences between China, the US and the EU are substantial, and China is clearly staying ahead of the curve across scale, structure and growth momentum,” said Alberto Vettoretti, managing partner at consultancy Dezan Shira and Associates.
Despite the heavy presence of coal in its energy mix, China’s rapid adoption of clean power sources and campaign for electricity autonomy is positioning it as the central driver of the global green transition – a position of prominence that has made energy another pillar in its wide-ranging economic rivalry with the US, according to Vettoretti.
China added roughly 445 gigawatts of power capacity during the first 11 months of 2025, according to data from its National Energy Administration. In comparison, Washington’s Energy Information Administration projected that the United States could add 64GW of capacity in 2025.
According to a report published by energy consultant firm Wood Mackenzie in December, the average end-user power prices for China in 2024 were roughly US$100 (RM405) per megawatt-hour. For the US, this figure was closer to US$150 (RM607), and for the European Union it was nearly US$250 (RM1,012).
Moreover, the report’s authors said, China’s energy prices are expected to stay flat, even as the share of solar and wind in the country’s energy mix is projected to climb from roughly 20% in 2024 to 47% in 2035. This is in clear contrast to Europe, where energy prices tend to increase with the proportion of renewable sources.
China’s rapidly expanding supply of cheap energy could help it outrun the United States in the race for global AI leadership, as energy consumption by future data centres and training facilities is expected to rise substantially over the next decade, US analysts warned.
OpenAI’s future cluster with Microsoft, scheduled to launch in 2028, is expected to hit a power level of 10GW, which is the same as a small to medium-sized US state, according to a manifesto published by former OpenAI researcher Leopold Aschenbrenner in 2024.
Aschenbrenner pointed out that of the two, China seemed much more likely to meet AI power demand by 2030, as the new electricity capacity the country has installed over the past decade alone is equivalent to the US’ entire grid.
“In the US, these things get stuck in environmental review, permitting and regulation for a decade first. It thus seems quite plausible that China will be able to simply outbuild the US on the largest training clusters,” he said.
US chip giant Nvidia held a private summit in December to address the power shortage issue facing data centres, according to tech-focused media outlet The Information.
Safeguarding industry growth with energy build-up has been a strategy that China has been following for decades, especially after Beijing joined the World Trade Organization (WTO) in 2001.
Between 2000 and 2011, China’s electricity demand outpaced its GDP growth, with an average annual increase of 12.03%, due to the expansion of electricity-intensive heavy industries including chemicals, steel, building materials and non-ferrous metals, according to a report by the China Electric Power Engineering Technology Association.
The country saw its greatest energy shortfall between 2003 and 2005, with a 35GW gap, the professional association said, forcing China to ramp up construction for energy generation and transmission infrastructure.
Over the 11-year period covered by the association’s report, Chinese electricity capacity installation grew at an annual rate of 11.55% – adding 67.5GW each year – with the government also building a cross-region electricity grid network known as the West-to-East Electricity Transmission Project.
While this glut of energy has kept utility costs low and helped fuel the rise of the country’s manufacturing industry, it has also contributed to the persistent deflationary pressures that have vexed Beijing’s economic policymakers, with the consumer price index growing by less than 1% for 33 months in a row.
US President Donald Trump, meanwhile, has bet on coal-fired power plants as a means to meet demand, signing an executive order in April to revive America’s “beautiful clean coal industry” and asking a child during a Christmas Eve phone call to remember “at all cost” that coal is “clean and beautiful”.
However, quickly adding new plants to the US grid is challenging right now, analysts said, partially because of Trump’s rejection of renewables at the federal level.
The White House’s move away from renewable energy, especially solar and wind, has led to a complete reworking of strategy by the US power sector as it attempts to rapidly build up its capacity, since these two are the cheapest and fastest technologies to bring online, according to David Widawsky, director of the US programme at the World Resources Institute, a sustainability-focused think tank.
He noted that in the US, the current wait time to get a turbine – essential for many forms of power generation – could be up to five years, with one company reportedly repurposing used aeroplane engines as generators amid the shortage.
“There is a contradiction between limiting energy sources and meeting the energy demands that are arising from AI and from other sources,” Widawsky said.
Trump wrote in a social media post on Monday that his administration had been working with Microsoft to ensure Americans would not need to “pick up the tab” for the power consumption of the country’s tech giants.
“Data centres are key to the boom and keeping Americans free and secure but, the big technology companies who build them must ‘pay their own way’,” he said.
Trump’s trade policies have also raised the cost of the materials needed to build energy infrastructure including steel, conductors and transformers, Widawsky said, which has most significantly impeded companies working to upgrade and modernise America’s grid to adapt to the new energy reality.
This point was echoed by industry insiders, who said it was difficult to accelerate the addition of capacity in the US under the current regulatory framework and ecosystem.
Given the limited resources available to build power plants – workforce, suppliers, contractors – and the rapid increase in demand, it’s hard to build new capacities quickly and cheaply, according to Tom Falcone, CEO of the Large Public Power Council, an association of 29 of the largest not-for-profit public power systems in the United States.
Building the power plants and relevant transmission infrastructure usually takes six or seven years, but on top of that, it is also time-consuming to obtain a permit, which takes another four to six years if everything goes smoothly.
“We have some utilities that are stuck in permitting; It’s taken 10 to 12 years to get a permit for really not controversial projects,” Falcone said during an episode of S&P Global’s Energy Evolution podcast published in December.
If the problem for the US is mostly concentrated on bottlenecks for the booming AI industry, Europe faces much broader and more severe hurdles.
The bloc’s energy costs are much higher than those of the US and China, especially since it lost access to cheap natural gas from Russia in 2022 following Moscow’s invasion of Ukraine.
This struck at the core of its manufacturing industry – the heart of its competitiveness – according to Rajiv Biswas, CEO at Asia-Pacific Economics in Singapore, an international economic research firm.
In a report published in May, the European Central Bank warned of potential job losses due to the bloc’s persistently high energy costs. Electricity prices in the EU are 2.5 times higher than in the United States.
A permanent rise of 10% in electricity prices could reduce employment in the most energy-intensive industries by up to 2%, the bank said, with the heavily industrialised areas of the EU such as southern Germany and northern Italy being hit the hardest. The report urged Europe to adopt cheaper and cleaner energy sources as soon as possible to preserve competitiveness.
In addition, Europe needs to build a single energy market, adopt a more unified approach to building its energy sector and integrate Chinese technologies if it wants to achieve that goal, analysts and industry insiders said.
While generally more expensive than China and the US, electricity prices for non-household users within the 27-member bloc varied depending on the specific country’s energy mix, with a 230% difference between the lowest price in Finland and the highest price in Ireland in the first half of 2025, according to official data.
A unified European electricity market would be required to erase such drastic differences, make the European grid more reliable and avoid blackouts such as the one that happened in Spain last April, said Enrico Letta, president of the Institut Jacques Delors, during an event the French think tank hosted in December.
Increasing grid connectivity could also help power flow from low-cost regions to high-cost regions to stabilise prices, said David Fishman, principal at business consulting firm The Lantau Group. But he expressed doubts that EU power prices could be brought down to levels competitive with China, even with a unified market.
Another issue facing the EU is competition between member states, which has stalled the development of crucial new technologies such as hydrogen energy, according to Catherine MacGregor, CEO of major French electric utility company Engie.
“I was absolutely blown away by China’s technological advances. I believe that Europe today has no choice but to rely on and integrate these technologies,” she said at the same Institut Jacques Delors event.
However, it needed to do so in a smart way, MacGregor added, by creating production capacity for solar panels or batteries in Europe by encouraging Chinese technology transfers and using European capital to create employment in the continent. – South China Morning Post
