Yarlung Tsangpo Hydropower Fuels PRC’s Energy-Computing Strategy

Executive Summary:

• Tibet’s Yarlung Tsangpo hydropower project, which broke ground in July, is set to become the world’s largest hydrpower installation.
• Officials see it as a key pillar of the PRC’s energy sovereignty and a step toward implementing the “total national security concept” and the “new energy security strategy.”
• Beijing wants renewable energy sources in western China to power a surge of computing power and data centers as it seeks technological primacy, something Tibet could assist with.
• Challenges persist, and the project has no fixed deadline in sight. Tibet’s remote location, extreme climate, and low level of development make integrating the region as a “national data hub node.”

On July 19, Premier Li Qiang (李强) launched construction of the Yarlung Tsangpo hydropower project (雅鲁藏布江下游水电工程) in Nyingchi in the Tibet Autonomous Region, hailing it as the “project of the century” (世纪项目) (CCTV, July 19). For the People’s Republic of China (PRC), the Yarlung project is an unprecedented engineering and energy gambit. At an estimated Renminbi (RMB) 1.2 trillion ($168 billion)—five times the cost of the Three Gorges Dam (三峡大坝)—it is slated to be the world’s largest hydropower installation (Xinhua, July 19). The design calls for five cascading stations burrowed into Tibet’s Great Bend gorge that, once completed, could generate up to 300 billion kWh per year, enough to power the homes of 300 million people (China Energy News, August 9, 2021; Ta Kung Pao, January 7).

International observers have warned that the Yarlung project could serve as a “water weapon” against downstream India and Bangladesh (The Guardian, July 21). This perspective often overlooks the its domestic logic as part of the PRC’s aims to become an “energy powerhouse” (能源强国) (CCTV, April 13, 2022). Under these ambitions, the Yarlung project is intertwined with the country’s surging demand for computing power amid intensifying global technology competition.

Beijing Sees Hydropower as Grid Stabilizer

Beijing’s long-running ambition to build a hydropower plant on the Yarlung Tsangpo river aligns with a drive for energy security. As General Secretary Xi Jinping has insisted, “the energy rice bowl must be held in our own hands” (能源的饭碗必须端在自己手里) (People’s Daily, January 7, 2022). Currently, coal remains the country’s main source of electricity generation, accounting for over 60 percent of supply (IEA, accessed September 16). Dependence on coal is not sustainable, however, and it clashes with Beijing’s “dual-carbon” (双碳) goals to peak carbon emissions by 2030, reduce emissions by 7–10 percent by 2035, and reach carbon neutrality by 2060 (Xinhua, October 24, 2021; September 24). As the world’s largest carbon emitter, the PRC is also bracing for the costs of carbon tariffs (Xinhua, March 20, 2023).

To diversify, the PRC has poured investment into renewables. By 2024, it had spent over $800 billion on its energy transition, more than the United States, European Union, and United Kingdom combined (Securities Times, June 19). Solar and wind have been the main focus, accounting for nearly 80 percent of new capacity in the last five years, and nearly half of all installed capacity (National Energy Administration [NEA], January 20, 2021, July 23). Their intermittent output, however, makes them unsuitable to substitute for coal as the foundation for the national grid. Hydropower, by contrast, has gained appeal as a stabilizer due to its controllable, predictable output.

Under the 14th Five-Year Renewable Energy Plan, Beijing promoted “integrated hydropower–wind–solar power bases” (水风光综合基地一体化), with hydropower providing flexibility and “peak-shaving” (调峰潜力) to support wind and solar (NDRC, June 2022). A pilot project on the Yalong River in Sichuan Province successfully demonstrated this synergy: the first stage of a hydro–solar complementary project (雅砻江水光互补项目) was completed in 2023 (Economic Daily, June 2, 2023; People’s Daily, March 22, 2024).

Beijing Believes Tibet is Key to Achieving National Ambitions

In line with the PRC’s energy transition goals, the Yarlung project is intended as the next milestone in the decades-old West-to-East Power Transmission Program (西电东送), which seeks to generate electricity in western China before channelling it to high-demand coastal regions in the East (Economic Information Daily, August 23, 2024). Tibet is often called the PRC’s “water tower” (中华水塔), and for good reason. Its theoretical hydropower potential exceeds 200 GW, roughly 30 percent of the national total (Tibet Daily, August 25, 2015). The lower reaches of the Yarlung Tsangpo alone could support 60–80 GW of hydropower capacity (China Opinion, July 23). Chinese analysts tout the Yarlung project as the “core project” (重点工程) of west-east power transfer, and officials say that it is mainly intended for “outward transmission” (外送消纳) to the eastern provinces (Our China Story, July 22; CINN, August 1). As part of this plan, a super-grid linking Tibet to the Guangdong–Hong Kong–Macao Greater Bay Area (GBA) will send renewable electricity to coastal industrial centers in about 9 milliseconds, delivering over 43 billion kWh per year to the GBA (CPECC, August 8; CCTV, September 16).

Beijing portrays the dam as a strategic investment in frontier innovation. The project doubles as a proving ground for cutting-edge technology: intelligent tunnel-boring machines (TBMs) carve tunnels through Himalayan rock; Geographic Information System (GIS) drone swarms monitor mountain fissures; and AI-assisted 3D printing is used to build infrastructure (Tsinghua News, May 23, 2022; Sin News, July 21; Jiaying Technology, accessed September 16). Officials also have lauded the project as providing a “strong energy guarantee” (强有力的能源保障), moving the PRC closer to its vision of a secure, self-reliant energy system (Ngari Administrative Office, April 18, 2014). Some state-affiliated media have even suggested that surplus electricity could be exported via grid links to South Asian neighbors (藏电南送) like Bangladesh, positioning Tibet as a clean energy hub and fostering cross-border integration (Ta Kung Pao, July 22).

When work on the dam began, authorities set up a new central state-owned enterprise (SOE)—China Yajiang Group (中国雅江集团)—to build and operate the project (Xinhua, July 19). The creation of this company signals that Yarlung is deemed a national priority on par with the Three Gorges Dam (Ditan, July 24). Yajiang Group’s leadership is drawn from the PRC’s top energy firms. Its inaugural chairman, Yu Bing (余兵), is a deputy head of the National Energy Administration (国家能源局) and a former general manager of China Energy Investment Corporation (国家能源集团) (NEA, accessed September 16; CHN Energy, accessed September 16). Over 100 personnel were mobilized from China Three Gorges Corporation (CTG; 中国长江三峡集团) and other giants to jump-start planning (Business Observer, July 21).

Speaking at the Yajiang Group’s launch ceremony, PRC Vice Premier Zhang Guoqing (张国清) stressed that the new company was intended to “implement the total national security concept and the new energy security strategy” (总体国家安全观、能源安全新战略) (Xinhua, July 19; Party Members Net, accessed September 16; Economic Daily, September 9). In other words, the project is cast as a pillar of the PRC’s energy sovereignty, and a strategic “energy security ballast” (能源安全压舱石), rather than just another infrastructure venture (People’s Daily Online, September 19, 2023). Yan Zhiyong (晏志勇), the chairman of the Power Construction Corporation of China (中国电建) who also spoke at the launch, went even further. He argued that tapping the Yarlung Tsangpo is five strategic projects in one, advancing the country’s ecological, national security, livelihood, energy, and international cooperation ambitions (HK01, February 13). This expansive framing underlines how Beijing sees the dam as a keystone investment advancing multiple core interests.

Energy and Computing Power Converge

The Yarlung project could also assist Beijing in its quest for technological primacy, providing the energy needs to support the buildout of a massive national network of data centers—the market for which grew nearly 250 percent from 2019–2024 (Zhiyan Consulting, February 20; China Brief, February 28). Hailed as the “engines” (引擎) of the digital economy, these “electric tigers” (电老虎) have become outsized energy consumers (People’s Daily, May 25). Some scholars project that their energy consumption could double by 2030 to account for around 5 percent of the national total (Journal of Beijing Institute of Technology, March; IEA, accessed September 16).

Policy has underpinned this rapid scaling of data infrastructure. In 2022, the State Council urged faster development of a nationally integrated big data center system (全国一体化大数据中心体系) to coordinate computing power, algorithms, data, and applications (State Council, January 12, 2022). And in August, the State Council called for deeply integrating AI with public governance and industrial development, aiming to raise the national adoption rate of smart devices and AI agents above 70 percent by 2027 (State Council, August 21; China Brief, September 21).

Expanding data centers and high-performance computing facilities have made uninterrupted electricity a necessity. Brief blackouts or seasonal shortages can disrupt systems and reveal vulnerabilities in digital infrastructure. The PRC still struggles to meet power demand, especially in the populous east, as seen most acutely during parts of 2021 (The Paper, September 28, 2021). As a result, companies operating data centers have faced tighter energy quotas (IDC News, October 20, 2021). To better balance electricity consumption and computing needs, five State Council departments (and a central Party organ) issued a 2023 document advocating “energy–computing application centers” (能源算力应用中心) under a “computing + energy” framework (MIIT, October 8, 2023). More recently, Beijing announced plans to further integrate data, computing, electricity, and network resources (数、算、电、网) (State Council, August 21).

The PRC’s western regions offer advantages in this energy–computing equation. High-altitude climates in the west slash the cooling costs that drive up data centers’ power usage effectiveness (Applied Energy, October 2020). Shifting data centers west also eases strain on coastal power grids. Most important, western China is rich in renewable and hydro resources that can advance the PRC’s “green data center” (绿色数据中心) agenda (NDRC, July 3, 2024). Key to realising this goal is the “Eastern Data, Western Computing” (东数西算) strategy, which encourages tech firms to site data centers in China’s west (The Paper, July 13, 2024; China Brief, February 28). Under the strategy, authorities have designated ten “data center clusters” (数据中心集群) across eight “national hub nodes” (国家枢纽节点), where companies enjoy preferential support for data center construction, inter-provincial transmission capacity, and backbone network integration (NDRC, May 24, 2021). (See Table 1 below.) In 2023, Beijing made this vision binding: it banned new large data centers outside the designated nodes and urged AI training and inference centers in the east to shift westward (NDRC, December 25, 2023).

Table 1: Comparing the PRC’s National Hub Nodes

(Source: Created by the authors based on official documents)

Tibet: The PRC’s Emerging Computing Pivot

Within the “Eastern Data, Western Computing” framework, Tibet is emerging as a potential hub. The region embodies nearly all of the natural advantages of western China: its high-altitude, low-humidity, low-temperature, and low-oxygen climate; its remoteness from urban load centers alleviates electricity demand pressures; and Tibet’s status as the PRC’s “water tower” indicates abundant clean power to support data center operations (Xinhua, September 26, 2024).

Local officials are eager to put Tibet on the national computing map. National planners have left open the possibility of creating additional hub nodes “as development needs dictate” (根据发展需要，适时增加国家枢纽节点), and the local government has openly lobbied to integrate the region into the “Eastern Data, Western Computing” scheme by designating Lhasa as a hub node (NDRC, May 24, 2021; Tibet Business News, January 7, 2024). Under a “Digital Tibet” campaign (数字西藏), local authorities are pouring investment into data infrastructure and digitization to attract data centers and tech companies to Lhasa, and some tech giants have already launched digital projects in the region (Xinhua, August 4, 2022; Digital Tibet Development Office, September 26, 2024). The region’s first AI computing center, “Yajiang 1” (雅江1号), opened in 2025 and has signed cooperation agreements with multiple AI firms (Tibet Daily, June 20).

Tibet’s limitations, however, mean it is yet to be considered as a hub under the national schema. Unlike western tech hubs such as Guizhou or Gansu, Tibet has poor logistics, a weak economy, and a shortage of skilled technicians. Its digital infrastructure lags other regions. Only in late 2024 was Tibet approved to host a national-level Internet Exchange Point (IXP; 国家级互联网骨干直联点), which had previously meant added latency and cost to Tibet’s data traffic, limiting its integration into national data and computing networks (Communications Administration of the TAR, October 24, 2024).

Beijing is stepping up support to tackle bottlenecks, designating the Sichuan–Tibet Railway and related highways as top-priority projects under the 14th Five-Year Plan for “building a strong transportation power” (建设交通强国) and ramping up the Tibet Aid Program (TAP, 对口援藏) (Ministry of Transport, March 30, 2022; China Brief, November 15, 2024). State-owned telecoms companies have also pledged to deepen cooperation in Tibet, with a focus on 5G networks, AI, and data centers (Xinhua, June 24; Lhasa Daily, December 18, 2024).

The Yarlung project is thus pivotal to regional development plans. The $168 billion initiative encompasses the hydropower dam itself, new inter-regional transmission lines, and logistics infrastructure (Sina Finance, July 21; China Energy Observer, September 15). Meanwhile, the Yajiang Group is recruiting talent nationwide for the project, seeking experts who can “adapt to long-term work in Tibet” (能适应长期在藏工作) (China Yajiang Group, August 10). One study estimates that the Yarlung project will create over 100,000 jobs in Tibet, more than 60 percent of them technical roles (Luoyang Normal University, July 30). Such an influx would draw talent, capital, and industries over the next decade and, if successful, could unlock Tibet’s natural advantages and embed the region in the PRC’s growing high-tech ecosystem.

Conclusion

The Yarlung project aims to unlock Tibet’s clean energy potential and lay the groundwork for the region to become a powerhouse in the PRC’s drive for energy self-reliance. Tibet’s climate also makes it an advantageous site for advancing Beijing’s computing power ambitions and has spurred efforts to integrate the region more deeply with national energy and infrastructure plans.

Tibet nevertheless remains a challenging region to operate in. While the Yarlung project has finally broken ground, it has no fixed deadline in sight. The same goes for other regional integrative infrastructure projects. Tibet’s remote location and extreme climate also present as many challenges as they do advantages. As a result, Tibet is yet to be designated a national data hub node. The general trend is positive, however, and over the coming decade Tibet is likely to rise in significance to the Party as it becomes more central to its agenda for the country.