GreenergyDaily

Nov. 4, 2025

China has increased subsidies that cut energy bills by up to half for some of the country’s largest data centres, as Beijing steps up efforts to boost its domestic chips industry and compete with the US.

Local governments have beefed up incentives to help Chinese tech giants such as ByteDance, Alibaba and Tencent, which have been hit with higher electricity costs following Beijing’s ban on purchasing Nvidia’s artificial intelligence chips, according to people familiar with the matter.

Local governments in data centre-heavy provinces such as Gansu, Guizhou and Inner Mongolia have responded by offering subsidies that slash big data centres’ electricity bills by as much as 50 per cent, provided that they are powered by domestic chips.

Data centres using chips from foreign vendors such as Nvidia are not qualified for such entitlements, the people said.

Electricity required to generate the same amount of tokens — units of compute power — from the current generation of Chinese chips is about 30 to 50 per cent higher than Nvidia’s H20, according to experts.

China’s energy-rich remote provinces such as Gansu, Guizhou and Inner Mongolia have become hotspots for data centre clusters.

To attract the biggest projects, these local governments have already been competing to offer some energy subsidies as well as cash incentives.

Some of these are enough to cover a data centre’s operating cost for about a year, said a person with knowledge of the matter.

Unit costs of industrial electricity in these provinces are about 30 per cent cheaper than those from the more developed coastal areas of eastern China. With the new subsidies, they will be cut further to about 0.4 yuan, or 5.6 cents, per kWh.