"12th Five-Year" energy investment reached 13.5 trillion

In a recent press briefing, the National Energy Administration revealed that the total investment in China's energy sector during the "Twelfth Five-Year Plan" period is expected to reach 13.5 trillion yuan. According to the officials, the majority of this funding will be sourced through market mechanisms, with private and institutional investors playing a key role in driving energy development. To support this shift, the government plans to expand investment channels, increase direct participation from energy companies, and relax restrictions on energy investments. Experts emphasize that achieving true diversification requires a rationalization of energy pricing, as current pricing structures remain a major barrier for private and foreign investors. The administration also outlined the distribution of investment across different sectors. A total of 8.5 trillion yuan is expected to be spent on building energy production capacity, while 5 trillion yuan will go toward storage, transportation, and projects aimed at improving people’s livelihoods. The central budget will focus on rural grid upgrades, along with supporting initiatives like power construction in remote areas and innovation in energy technology. The plan also calls for better coordination between credit policies and energy strategies. It encourages the development of new financial products and services to facilitate more diverse energy investments. This includes expanding business investment channels and increasing the share of direct investment by energy firms. Traditionally, banks have been the main source of financing for energy projects, with project capital typically accounting for 25% to 30%, and the rest coming from loans. However, as energy projects grow in scale and complexity, reliance on a single funding source has become increasingly challenging. Over the past decade, companies have started exploring alternative methods such as issuing bonds and securities, and these efforts are now gaining more momentum. Despite this progress, Lin Boqiang, Director of the China Energy Economic Research Center at Xiamen University, noted that most energy companies still depend heavily on traditional sources of funding. He stressed that developing non-domestic funding channels remains crucial for long-term sustainability. Gao Shixian, a researcher at the National Energy Research Institute, agrees that diversifying investment entities is essential to reflect market principles. While the energy sector is largely open to private and foreign investors, the actual flow of capital remains limited. Gao believes that the key to attracting more investment lies in making energy projects profitable for all stakeholders. Recent developments, such as the West-East Gas Pipeline expansion and the second round of shale gas tenders, have marked significant progress in opening up the energy sector. The "Planning" also emphasizes encouraging private and foreign capital to enter energy sectors not explicitly restricted by law, while promoting diversified infrastructure investments in power grids and oil and gas pipelines. However, Lin Boqiang points out that diversification is still in its early stages, with 90% to 95% of investments coming from state-owned enterprises. He argues that only when energy pricing becomes more market-oriented will private capital be willing to invest. In contrast, state-owned enterprises can absorb losses due to government subsidies, but private firms cannot afford similar risks. Ultimately, both experts agree that the future of energy investment depends on creating a more transparent and profitable environment for all participants.

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