Profits at State Grid, the largest of China’s two state-owned electric utility operators, plummeted 81% in the first half of 2020, as the pandemic decimated demand for power. The near-term outlook for the massive grid operator, which supplies nearly 90% of China’s electricity, is hard to forecast. Revenue rebounded as China’s economy recovered, but State Grid’s profit is under pressure from increased capital expenditures and asset cuts that are mandated by Beijing. The utility operator is due to spin off its profit-making property and equipment manufacturing units by the end of the year as part of the government’s plan to commercialize China’s energy networks. Meanwhile, State Grid has committed to spending $70 billion annually over the next five years to build capacity in renewable energy as China shifts to a low-carbon economy.
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