The global power market is undergoing significant differentiation.

In the United States, the explosive growth of artificial intelligence (AI) and data centers is pushing the grid to its limits, with capacity prices reaching regulatory ceilings, forcing regulators to intervene in cost-sharing; while in China, as the rapid expansion of renewable energy capacity continues, electricity prices are entering a pronounced downward trend, with industrial and commercial electricity costs facing re-evaluation.

Recent market data show that the latest auction price from the largest grid operator in the U.S., PJM, has reached a historical high. If there were no price controls, the demand from data centers would have pushed electricity prices up by another 60%. In response, U.S. President-elect Trump has clearly pressured tech giants to "pay for themselves" for the increased power demand. This political maneuver directly intensified market concerns about utility sectors and tech companies' operating costs.

Meanwhile, the Chinese market across the ocean presents a completely different picture. According to a recent research report from BofA Global Research, the downward trend in China's electricity prices is intensifying. The proxy purchase power tariff in January 2026 fell by 10% year-on-year, and the annual power contract prices in key economic provinces such as Guangdong and Jiangsu have seen significant declines.

United States: AI Straining the Grid, Trump Pressuring Tech Giants

The supply and demand contradiction in the U.S. power market has reached a critical point.

Wall Street Observer reported that the power generation capacity price in the latest base surplus auction for 2027/2028 by the largest grid operator in the U.S., PJM Interconnection, rose to 333.40 USD per megawatt-day (MW-day), breaking records and directly hitting the price ceiling approved by the Federal Energy Regulatory Commission (FERC).

Even more astonishing was the "shadow price" under regulation. Details from the auction report showed that if the price cap were removed, the simulated market clearing price would have reached 529.80 USD per MW-day. This means that, in a completely unregulated market environment, the massive demand from data centers would have driven electricity prices up by nearly 60% over the current "ceiling price".

Goldman Sachs warned that if future auctions remove the price ceiling, U.S. electricity bills could double, and the market may face an extreme test of choosing between "AI development" and "basic electricity reliability".

With the electricity price expectations getting out of control, political pressure followed.

Trump clearly stated on the social media platform Truth Social that although data centers are crucial for the prosperity of AI, large tech companies building these facilities must "pay for themselves", rather than passing the costs onto ordinary consumers.

He revealed that the government has already engaged in discussions with Microsoft, and Microsoft will make "significant changes." Microsoft's Vice Chairman Brad Smith is expected to make a statement on the issue of AI infrastructure cost sharing. This policy shift means that tech giants, while enjoying the benefits of AI, will have to bear the huge power infrastructure costs.

Data from the U.S. Energy Information Administration (EIA) last November showed that household electricity bills in the U.S. had reached record highs, approaching an unprecedented 20 cents per kilowatt-hour. With rising fuel costs and increasing demand, it is expected that electricity costs will further rise in 2026, with transportation and commercial users facing similar trends.

China: Electricity Prices Falling, Annual Contracts Declining

In stark contrast to the persistent high electricity prices in the U.S., a report released by BofA Global Research titled "China Power: Seventh Edition of the Power Pulse" points out that electricity prices in China are facing downward pressure.

Data shows that the proxy purchase power tariff in January 2026 fell by 10% year-on-year, which is a decrease of 4 cents per kilowatt-hour.

BofA Global Research noted that in Guangdong, the annual contract price has dropped to the floor price level; the contract price in Jiangsu fell by 7 cents per kilowatt-hour year-on-year; Fujian and Jiangxi saw drops of 3-4 cents per kilowatt-hour, while Hubei and Liaoning saw even larger declines of over 4-5 cents per kilowatt-hour.

Early market checks indicate that without considering capacity tariffs and potential rebates, the annual electricity price nationwide could fall by 3-4 cents per kilowatt-hour in 2026. This trend confirms that the Chinese power market is shifting from structural scarcity to a more relaxed situation, with the buyer's market characteristics becoming increasingly evident.

Supply Abundance: Rapid Growth in Wind and Solar Installations, Decline in Coal Power Output

The core reason for the decline in China's electricity prices lies in the rapid expansion of the supply side and relatively weak demand. According to BofA Global Research, due to a warm winter delaying heating demand, coal power output in December is expected to be disappointing. Data from November showed that the weekly coal power production from the China Electricity Council (CEC) decreased by 9% year-on-year.

At the same time, the supply of renewable energy continued to grow. Although December rainfall was 44% lower year-on-year, which might reduce hydropower utilization hours, the water flow at Yangtze Power increased by 55% year-on-year in the fourth quarter of 2025, driving its production to increase by 20%. In terms of wind power, the domestic wind power bidding volume in 2025 reached 167 GW, which, although down 13% year-on-year, remained at a high level. Moreover, the bid prices for onshore wind turbines in the fourth quarter of 2025 increased by 20% year-on-year, indicating strong future installation momentum.

The photovoltaic (PV) industry chain faces even fiercer price competition. The report pointed out that the gross profit margin of PV module manufacturers has fallen to a new low (-11 cents per watt), and data from January's pre-production planning shows that the output of silicon wafers, solar cells, and modules has declined month-on-month. This full-industry "inward competition" and capacity release further lowered the grid-connected electricity prices of new energy, thus pulling down the overall electricity price level.

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Original: toutiao.com/article/7595056929496482339/

Disclaimer: This article represents the views of the author alone.