China's Big Game

The Internet of Energy - a combination of AI, big data, cloud computing and IoT - could be the key to decarbonizing the planet's economy.

by Lifan Li |
27 June 2019
16 min read
by Lifan Li |
27 June 2019
16 min read

This article is taken from World Energy (WE) number 43, "The Challenge". Read the magazine.

The concept of artificial intelligence (AI) was coined by the Americans in 1956. The IT colossus IBM proposed the notion of “Smart Earth” in 2008, which led to the rapid growth of AI technologies and the development of other concepts—big data, cloud computing, the Internet of Things (IoT)—largely bridging the traditional gap between theoretical sciences and practical applications. Despite having emerged later than the American one, Chinese AI policy has also developed rapidly, shifting its focus from national objectives to a more strategic level. In 2015, Beijing launched the first ten-year action plan aimed at transforming China into a hi-tech power, the so-called “Made in China 2025” plan, which accelerated a deep integration between information technology and the new generation manufacturing system, while promoting Smart Manufacturing. On March 19, 2019, the Chinese government published a document entitled “Directives for the promotion of a profound integration between AI and the real economy,” aimed at outlining the development of new generation technologies in various industries. Starting in 2017, the attention of Chinese AI policy shifted to the issue of integration between technology and industry; at the same time, the spread of strategically important industrial initiatives began in many cities in the context of the Internet Plus project for the development of four areas:  mobile Internet, cloud, big data, and Internet of Things in the production, finance, medicine, administration and farming sectors. While in 2015 the market value of the Chinese AI industry was 11.241 billion renminbi (around USD 1.6 billion), by 2016 it had grown to 14.19 billion (around USD 2 billion), an increase of 26.2% on the previous year. In 2017, it exceeded 20 billion, reaching 21.69 billion renminbi (over USD 3 billion, equal to an annual growth of 52.9%), while by the end of 2018 it had reached almost 40 billion (almost USD 6 billion). In the same year, in the reference market for AI+ (artificial intelligence integrated in the various sectors of health, finance, education, security) it was in first place with 40% of the total, followed by the intelligent robotics industry, which accounted for 27%. This shows that Chinese companies are more interested in concrete AI applications.


An energy revolution

Among the most disruptive technologies, AI will launch a new era of energy and electrical development, especially in Smart Grids, while promoting the concept of the Internet of Energy. On June 13, 2014, in presenting the “Four revolutions, one cooperation” strategic agreement, President Xi Jinping illustrated the Chinese “Strategy for the Energy Revolution and Energy Development.” In 2015, Prime Minister Li Keqiang presented the “Internet Plus” action plan as part of the Chinese government’s 2016 work report. The National Energy  Administration, the National Commission for Development and Reforms and the Ministry of Industry and Computing published a joint document entitled “Opinions and guidelines on promoting the development of Internet Plus smart energy.” After which, in 2017, the National Energy Administration announced the launch of the first set of 55 Internet of Energy pilot projects. In August of the same year, the State Grid Corporation of China (SGCC), China’s biggest electricity company, launched AI-related activities with the strategic aim of “creating an extraordinarily competitive Internet of Energy giant at global level.” In 2018, an increasing number of research institutes analyzed the theory, techniques and methodology of the Internet of Energy from an academic perspective, and subsequently several research bodies linked to it were born. Cloud computing, the Internet of Things, big data and AI are key technologies for the Internet of Energy. AI technologies will be based on smart grids to stimulate deep integration between electricity, energy and information, thus ushering in a new era of energy and electrical development.

In order to promote the strategic planning of the “Internet Plus” project by the Council of State, on March 29 2019, Tsinghua University produced the “White Paper on the development of the Chinese Internet of Energy (2018).” In addition to describing its state of development in various sectors such as politics, industry, technology, innovation, construction and public ecology, the document analyzes the current development from a global perspective, highlighting the challenges posed by future development. Several energy companies have promoted the first examples of integration between AI and intelligent electricity grids, laying the ground for an acceleration of research and development to explore the potential of AI. In addition to the SGCC, in 2014 the China Electric Power Research Institute (CEPRI), an electricity research institute, founded the AI Application Research Institute, a research center on the application of Artificial Intelligence. The integration of AI with smart electricity grids is something for the future, when the electricity grid will be largely interconnected. The SGCC began to boost research on big data back in 2014, and it has now created a big data platform for its corporate network with a hybrid architecture (i.e., both centralized and distributed) which promotes the transmission of huge amounts of data and the transformation and smart distribution of electricity.

The electricity system is the core and the articulation of the Internet of Energy, allowing the creation of an interconnected network of various types of energy and using the Internet and technology to transform the energy industry, achieving the horizontal integration of different energy sources and vertical coordination according to the “source-network-loading-storage” model. For the optimization of energy systems to be complete, networks must be shared, environmentally sustainable, secure and efficient. Strategically, between 2014 and 2018, Chinese policies on the Internet of Energy initially focused on six levels: international treaties; macro-strategies; laws and regulations; industrial parameters; industry standards; and regulatory documents. To date, 296 policies and regulations have been issued by various government agencies.

From the point of view of business development, for companies that deal with the Internet of Energy, crossover has become an obvious choice. Internet companies are firmly entering the energy services sector through the Internet Plus channel. Communication technologies, for example, are used to control the entire flow of information, from production to energy consumption, and to expand the scope of energy interconnection, while big data technology applied to the Internet of Energy is increasingly being used to collect and analyze data on energy, devices, channels and consumption. This means, for example, that weather forecasts will allow us to plan energy generation rationally and plan its distribution accurately. As for the success stories, Huawei is beginning to venture into the photovoltaic industry to provide users with cleaner and safer energy by combining AI with photovoltaic technology. As of December 2018, there were 24,651 companies operating in the Energy Internet sector registered in the business register throughout China. The new concept of the “Internet of Energy” has also triggered a strong expansion of the financial market. According to partial statistics, there are currently around 287 listed stocks linked to the Internet of Energy (for a total market value of over 3 trillion renminbi), involved in integrating industrial supply chain and energy storage systems with smart solutions, integrated energy platforms and services, as well as the development of new energy distribution projects.

A bumpy road ahead for Beijing

First, the Internet of Energy is a concept that requires a long development process. It is a sector in which China lacks technology, innovation, a distribution network and reserves. Despite the development in terms of technological innovation, it will be difficult for China to keep pace with the technological achievements of the West. The country still lacks key technologies needed for energy storage, the integration of different energy sources and the application of big data to the electricity sector, as well as a real electricity market and exchange platforms. Moreover, even if the commercial use of AI begins to spread on a large scale, many technologies are still in an embryonic state.  China, therefore, still has many crucial technical problems to solve. Second, the patent application process for the Chinese Energy Internet is moving slowly. As of December 2018, there were 3,118 research institutes connected with the Internet of Energy. The number of documents on the subject published in the last five years continues to increase. Research is focused on these six main themes: multienergy systems and integrated energy systems; virtual power plants; energy distribution; “Energy + big data” (the application of big data in the energy field); “Energy + Blockchain” (the application of blockchains in the energy field); “Energy + Distributed Transactions” (the application of distributed transactions in the energy field). As regards the Internet of Energy sector, there are few patents: in 2014, there were only 14, and although by 2018 they had reached 299, there are few of them in the area of transversality. Furthermore, the expected boom in talent training has not come about and the uneven development of infrastructure has produced the model of “a strong south and a weak north.” The first group of 55 pilot projects are focused mainly along the delta of the Blue River and in southwestern China. The North still depends on a traditional energy production system and the AI sector has not been taken seriously.

Integration: not a simple solution

Information management is an inevitable trend in the energy and electrical sector but the data are hard to manage in a unitary way.  How to organize all the different types of data effectively, extrapolate salient information and establish relationships is an important part of AI in promoting the creation of information technologies. Starting from the integration of different energy sources: energy is the fundamental problem that human society has always faced. Effectively integrating multiple energy sources and developing solutions that ensure its better use based on factors such as distribution, characteristics and public service energy companies are important ways to achieve energy savings and sustainability. In this process, not only is the quantity of data to be processed enormous, but the method of analysis is extremely complex, which is why AI has to showcase its talents. As regards integrating different technologies, whether it is big data, cloud computing or information interconnection, each contributes to promoting energy integration and creating the Internet of Energy. And it is only a small part of the technology that exists in modern society. With emerging technologies and the application of more mature technologies, more opportunities will be created in the future.

New challenges behind tariffs

The U.S. is at the forefront of  artificial intelligence research. In May 2018, the White House hosted the American Industrial Summit, which brought together U.S. industry leaders to discuss AI policies and ensure the U.S. plays a guiding role in the global industry. Since 2015, the U.S. government’s investments in research and development in this sector have increased by over 40 percent. But the rapid development of China in this area, which has led Beijing to compete with Washington in terms of spending on the sector, means that the U.S. now considers China to be its main challenger. When a new round of trade negotiations between China and the United States was launched on February 11 2019 U.S. President Donald Trump ratified the first U.S. strategic plan on AI, which requires federal agencies to give priority to investments in research and innovation in the field of artificial intelligence, while at the same time facilitating the use of government funds that contribute to the development of the industry. In the meantime, the Pentagon has established that the Joint Artificial Intelligence Center (JAIC) will introduce the use of AI in the field of military training. As early as November 2018, the U.S. Department of Commerce’s Industry and Security Office reported on the latest technology export controls. The U.S. government is considering introducing controls over 14 crucial areas of technology, including Artificial Intelligence, integrated circuits, quantum computing and robotics. The technologies considered to be most advanced and innovative for national security are those that allow 3D face printing and voiceprint recognition. And the target country is China.

AI produces talents, but the best are not in China

In terms of competition in the AI sector, there are huge differences between China and the U.S. The chart shows the total number of talents in the AI sector of each country, i.e., researchers who have “registered patents and/or published documents in English” over the last ten years. While there are many of them, only 5.4% of Chinese talents are among the “best.” However, as confirmed by a recent Stanford report, in the U.S., the percentage of “best talents” compared to the total number is just over 18 percent. Nevertheless, China should not be disappointed, for India fared far worse. Delhi has the third largest talent pool in the world (almost equal to the Chinese one) but its percentage of the “best” is less than 3%. As of June 2018, there were 4,925 AI companies worldwide. Of these, 1,011 were Chinese (20.5% of the total) and 2,028 U.S. (41.2% of the total). Beijing is home to the greatest number of AI companies (395), followed by San Francisco (287). As for the most widespread sectors, China seems to focus particularly on the senses: hearing, sight and oral production. But in the Internet of Energy area, China and the United States have begun to learn from each other. For example, the U.S. company TransActive Grid operates a blockchain in Brooklyn, NY that encourages residents to sell excess solar energy within the community and to use smart meters for statistical purposes. Generally, Chinese researchers and start-ups should use their imagination more and instead of imitating the West focus on long-term goals and try to be at the forefront in some areas. At the same time the U.S. policy makers should change course on AI, and begin to evaluate in a concrete way how to integrate infrastructure and public institutions with new technologies.



L'autore: Lifan Li

Lifan Li è professore ricercatore associato presso la Shanghai Academy of Social Sciences, consulente dell’Overseas Chinese Affairs Office della Città di Shanghai e Segretario Generale del Center for Shanghai Cooperation Organization Studies. È stato responsabile del National Planning Project of Philosophy and Social Sciences e del National Project sponsorizzato dall’Overseas Chinese Affairs Office del Consiglio di Stato nel 2006-2008. Ha partecipato al progetto di consultazione sul processo decisionale per gli studi internazionali metropolitani nel 2006 ed è stato uno dei responsabili di progetto (chief drafter) per il piano urbanistico di Shanghai presso Overseas Chinese Affairs. Ha tenuto numerose conferenze in USA, Giappone, Russia, Asia Centrale ed Europa, e ha pubblicato diversi articoli su differenti argomenti in Cina e all’estero.


Nigel Dickinson, autore delle fotografie di questo articolo, è un fotografo documentarista britannico. I suoi lavori si concentrano sui temi dell’ambiente, della condizione umana, delle comunità emarginate, dello sviluppo sostenibile, dell’identità e della cultura. Ha vinto numerosi premi, tra cui il World Press award nel 1997 e lo UK Press Photographers nel 2008.