Huaxi Securities: AIDC's construction of booming diesel and other power generation equipment is expected to fully benefit
The Zhitong Finance App learned that Huaxi Securities released a research report saying that the primary factor in selecting a data center site is shifting from traditional proximity to optical fiber networks and end users to ensuring electricity supply. Diesel engines are a common choice for backup power sources. The production rate of diesel engines for data centers in China is only 17% in China, and there is plenty of room for domestic replacement. AIDC construction is booming, and power generation equipment is expected to fully benefit, bringing investment opportunities for targets related to the diesel generator set, diesel engine and upstream components industry chain related to backup power sources.
Huaxi Securities's main views are as follows:
With the popularity of artificial intelligence applications and industrial electrification, global data center demand is growing exponentially
The average power of data center racks has increased from 2-3 kW to about 15 kW per rack, and the power of some cutting-edge data center racks has reached 50-100 kW. The huge power increase far exceeds the power supply capacity of most power companies, causing a large power supply gap. Due to the power supply gap, the data center construction strategy is shifting from connecting to the power grid to building its own power plants. Currently, the primary factor in selecting a data center location is shifting from traditional proximity to fiber-optic networks and end users to ensuring power supply.
AIDC power generation equipment is mainly divided into main power supply and backup power supply. Common backup power options are diesel engines
The main power supply bears 100% of the basic electricity load. Over 90% of data centers choose grid electricity purchases+own gas turbine configurations, and the installed scale requires 1.2-1.3 times capacity expansion and redundancy. The backup power supply starts when the main power supply fails. The installed capacity is generally 50% of the maximum load. The most common option is a diesel engine.
Domestic data centers are dominated by foreign imports and joint ventures, and the localization rate is low
According to ZAKER, the total market share of the four foreign brands Cummins, MTU, Caterpillar, and Mitsubishi in the 2024 data center diesel engine market was as high as 90%. The production rate of the complete machine market in China was only 17%, and the domestic replacement space was extremely broad.
Overall data center diesel orders are in short supply, and the industry is booming
Domestic and foreign diesel manufacturers are in short supply of orders, and production capacity continues to expand. The domestic diesel engine, engine and upstream components industry chain is expected to fully benefit.
Risk warning:
AIDC construction progress falls short of expectations; risk of deterioration of the competitive landscape; industry policy risks, etc.