The Jinko group, the world’s largest solar panel maker, will enter the data center business, supplying power directly from its plants to meet the growing demand from the spread of artificial intelligence.

In the desert city of Zhongwei, known as a historical Silk Road hub in what is now the Ningxia autonomous region in inner China, a plan emerged in April to build a RMB 24.5 billion (USD 3.6 billion) data center.

The plan was the result of an agreement between the local government and Jinko Power Technology, part of the Jinko group. The company operates power plants that mainly use solar panels produced by JinkoSolar, the group’s panel manufacturer. Construction of the data center is set to begin this year, with a goal of completion by 2028.

The facility will be a one-gigawatt data center. It will spread out over 530,000 square meters. A dedicated power plant will be built to supply electricity directly, creating a stable source of revenue.

Operating data centers in tandem with power plants is known in China as computing power coordination, a term that was included for the first time in a government policy document released in March outlining policies for this year. In Japan, it is known as watt-bit collaboration.

But uniquely in this case, a solar panel maker is taking the lead.

“While a lot of companies are focusing on bundled sales with storage batteries to diversify revenue beyond panels,” an employee at a major competing Chinese solar panel maker said. “Running a data center is unusual.”

At the end of 2025, Jinko Power had cash and deposits of RMB 5.8 billion (USD 853.8 million). Construction costs will be covered through a combination of company funds and borrowing. Multiple banks, such as China Construction Bank and CTBC Bank are reportedly considering financing. The company is also exploring the establishment of a joint venture with outside investors.

Behind the major investment is the underutilization of solar power facilities in China, an issue known as curtailment. The curtailment rate rose to 5% last year from 2% in 2020, according to a calculation using data from China’s National Energy Administration, and then jumped to 9% in the January-March period this year.

China accounted for about 60% of new solar installations globally in 2025, according to the International Energy Agency, with 415 gigawatts added. But the development of costly transmission infrastructure has not kept pace.

China’s western inland regions, which have extensive open space and abundant sunlight, are ideal for large power plants, while demand for electricity is concentrated in eastern coastal areas with major cities such as Shanghai. The government is promoting an initiative known as “Eastern Data and Western Computing,” in which data processing for AI in the east is handled by data centers in the west.

AI, the main driver of rising power demand, is well suited to data centers distant from concentrations of demand. AI operates through training, which builds foundational models, and inference, which applies them. The training process largely can be conducted at any time and place.

Jinko decided to run the data center itself because revenue in the external power supply business depends on factors such as securing long-term contracts and maintaining an advantage in price negotiations. By shifting from an electricity supplier to a company that generates and manages demand, it aims to stabilize earnings.

In China, a phenomenon known as involution—excessive competition driven by heavy investment in industries prioritized by the government—has happened repeatedly, and solar panels are no exception. JinkoSolar reported a net loss of RMB 6.8 billion (USD 1.0 billion) for the fiscal year ended December, and a loss of RMB 1.3 billion (USD 191.4 million) for the January-March quarter this year.

In 2025, the government began promoting efforts to curb this kind of disorderly price competition. Expanding power demand for data centers is one such example.

But in Zhongwei, state-owned power giant China Datang Group also began operating wind and solar power plants in May to directly supply data centers. Even in the distant desert, the involution trap is not easily escaped.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.

Note: RMB figures are converted to USD at rates of RMB 6.79 = USD 1 based on estimates as of June 8, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.