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Ben Jiang

For generations, Ulanqab – a city several hundred kilometres northwest of Beijing whose Mongolian name means “red cliff pass” – was known for its windswept pastureland, where cattle grazed and potatoes thrived under long hours of sunlight.
Its economy hinged on the weather, driven by the cool, strong breezes sweeping through the Yinshan mountain range.
Today, giant wind turbines stand next to livestock across those sloping grasslands.
As the global artificial intelligence boom fuels a scramble for more computing power and electricity, the same climate that has sustained Ulanqab’s pastoral economy is turning this Inner Mongolian city into one of China’s most coveted industrial assets.
Earlier this month, Chinese renewable energy company Envision Group brought its Galaxy Campus online in Ulanqab. The AI computing facility has, at its heart, a 120,000-square-metre AI data centre, roughly the area of 20 standard football pitches, according to a company statement.
Designed to accommodate up to one million AI accelerators, the campus has a planned power capacity of over two gigawatts, a scale that would make it one of the world’s largest AI computing facilities.
For comparison, Colossus 2, the massive US-based AI data centre run by Elon Musk’s SpaceXAI, has a projected 1.5-gigawatt IT power capacity, according to a ranking by consultancy Epoch AI.

Envision selected the Ulanqab location because it could pair computing infrastructure directly with renewable power, with the Galaxy Campus partly powered by Envision wind farms, according to the firm.
Ulanqab accounts for about one-tenth of China’s total wind resources and one-third of the Inner Mongolia autonomous region’s, according to China’s Xinhua news agency.
“Much of that wind once simply blew past, wasted,” said Yang Wenlong, a project director at Envision Group. “Now it can be turned into electricity for computing, and then into tokens.”
About 67 per cent of Ulanqab’s energy was powered by green electricity, including solar power, Yang noted.


A decade-long pivot
Ulanqab’s shift from raising cattle and potato harvesting to the AI frontier has followed a decade-long path.
In 2013, Huawei Technologies began working with the Ulanqab municipal government to expand its data centre presence there. Five years later, US tech giant Apple announced plans to host its iCloud service on data centres in the city, the same year Chinese cloud platform UCloud began building its own facility in Ulanqab.
Short video giant Kuaishou initiated construction of a data centre in 2020, and completed the first phase of a centre designed for 300,000 servers several years later.
Traditional data centre operators VNET, Centrin Data and Chindata have since added green, AI-focused computing projects in Ulanqab, and Hangzhou-based AI model start-up DeepSeek was reportedly set to add one gigawatt of computing capacity in the city earlier this year.
As of June, Ulanqab had signed 89 data centre deals, 86 of which were AI computing projects, according to local government figures.
The city has a combined 12.5 gigawatts of capacity under development or planned, three times the 4.2 gigawatts projected for Johor, the southern state of Malaysia that has emerged as one of the largest data centre sites in the Asia-Pacific region, according to recent research by investment bank Goldman Sachs.
“We are no longer selling computing power; we are selling tokens,” said Liu Huansuo, deputy director of Ulanqab’s big data management bureau, referring to the industry’s preferred measure for the units of text processed by AI models.
China’s appetite for those tokens has exploded in recent years. Daily consumption rose from about 100 billion at the beginning of 2024 to 100 trillion by the end of 2025, before exceeding 140 trillion in March 2026, according to government data.
This surge in token demand is driving a greater need for the electricity and computing infrastructure required to produce them. For Ulanqab, the wind blowing across the grasslands is no longer merely an energy resource – it helps to power an AI query.
And every AI token comes with a cost.


The power economy
“Every one million tokens generated requires two to three kilowatt-hours of electricity,” said Luo Xiyong of data centre operator Zhonglian Data.
In Ulanqab, data centre operators have access to some of China’s cheapest power.
Rates vary by supply arrangement, but some operators have secured electricity for about 0.35 yuan (US$0.05) per kilowatt-hour, less than half the roughly 0.70 yuan charged in eastern provinces. Electricity can account for 60 to 70 per cent of a data centre’s operating costs, making even modest savings significant.
At full utilisation, a one-gigawatt AI computing centre might consume as much as 8.76 billion kilowatt-hours of electricity a year. Cutting the electricity cost by just 0.1 yuan per kilowatt-hour might reduce a centre’s annual power bill by about 876 million yuan.
For China’s burgeoning AI industry, which is still searching for viable ways to monetise its models, cheap power is no marginal advantage – it is a central part of the business model.
But it is only half the equation. The electricity consumed by computing equipment ultimately becomes heat that has to be removed.
That is how Ulanqab’s cold, dry climate provides another advantage. With an annual average temperature of about 5 degrees Celsius, the city can use outside air as a natural cooling resource for much of the year, reducing reliance on energy-intensive mechanical systems and leaving more electricity available for computing.
Power usage effectiveness (PUE) measures the ratio between a data centre’s total electricity consumption and the electricity delivered to its servers. A PUE of 1.0 means every watt goes directly to computing, while a higher figure indicates more power is consumed by supporting systems such as cooling and power conversion.
Leading data-centre clusters in the region have a PUE below 1.15, against a national average of close to 1.5, meaning that more of each watt reaches its chips.
A difference of only a few cents can translate into hundreds of millions of yuan in savings at gigawatt scale. Those efficiencies matter because the amount of electricity consumed by computing has been rapidly rising.
China’s data centres consumed about 170 billion kilowatt-hours of electricity in 2025, accounting for 1.6 per cent of national power use, according to the National Energy Administration (NEA).
By 2030, annual consumption by the sector was expected to reach about 800 billion kilowatt-hours, nearly five times 2025 levels, and account for roughly 6 per cent of national electricity use, according to Wang Hongzhi, director of the NEA.

A coordinated system
The race to secure electricity for AI infrastructure is not unique to China. In the US, the rapid expansion of AI data centres has raised concerns about whether existing power grids can keep pace with demand, with some projects facing delays because of a bottleneck in securing enough electricity.
This is in contrast to Ulanqab, where AI giants and tech behemoths are betting that its wind and solar power, combined with a cooler climate, can provide a cheaper and more sustainable foundation for the next generation of AI infrastructure.
For China, the challenge is not only generating enough electricity, but also ensuring that electricity supply and computing capacity grow in tandem.
In 2026, China’s Government Work Report called for the coordinated development of computing capacity and electricity supply for the first time, reflecting Beijing’s push to better align its rapidly expanding AI infrastructure with the country’s power system.
The concept, known as “computing-power and electricity coordination”, aimed to bring together electricity generation, grid capacity, energy storage and computing resources so that renewable power could be used more efficiently to support growing AI demand.
Jiang Yi, spokesman for the National Development and Reform Commission, described the new power grid as providing stable, clean electricity, the computing network as the “brain” directing intelligent power-grid scheduling and renewable energy consumption, and the communications network as the “highway” supporting cross-regional computing.
That vision goes beyond simply building more data centres. It requires linking electricity, computing and communications infrastructure into a more coordinated, national system.
For Ulanqab, that could make its advantages more valuable. Its wind farms provide renewable electricity, data centres then convert that power into computing capacity, and a national network could help deliver that capacity to users far beyond Inner Mongolia.
But China’s computing boom has created another challenge: not all that capacity is being used.
While demand for AI computing is surging in some of the country’s biggest technology centres, large amounts of capacity elsewhere remain underused, leaving servers, power infrastructure and expensive data centre facilities running below their potential.
Data from the China Academy of Information and Communications Technology (CAICT) puts the gap in stark terms. In 2025, China’s intelligent-computing centres had about 3.8 billion card-hours of intelligent-computing capacity available, but only about 1.4 billion card-hours were actually used, putting utilisation at just 36.8 per cent.
CAICT has called for closer coordination between computing supply and demand, including better scheduling of computing resources and more precise matching between users and available capacity.
The mismatch reflects the geography of China’s computing buildout. Regions such as Ulanqab have attracted data centres because of cheap electricity, abundant land and favourable climates, while much of the demand for AI computing remains concentrated in China’s eastern cities and affluent regions, where technology companies and users are based.


Moving up the value chain
For Ulanqab, the next challenge is therefore not simply building more servers, but making sure those servers are connected to real demand.
The city is now seeking to move up the AI value chain. Under a three-year action plan for 2026-28, Ulanqab plans to expand computing capacity to more than 200,000 petaflops – a measurement of computing capacity – by 2026 and develop a platform for trading and settling AI tokens.
The plan calls for Ulanqab to evolve from a data centre hub into a broader computing and AI services centre, focusing on green computing for large AI model training and inference, while encouraging investment in liquid cooling, computing hardware, AI software and talent.
The aim is to capture more value from its renewable power: not simply selling electricity or computing capacity, but turning that power into AI computing and ultimately into the tokens generated by AI models.
For a user sitting thousands of kilometres away, an AI query may take only seconds to answer.
Behind that response, however, is a chain of infrastructure stretching back to places such as Ulanqab: servers drawing electricity, cooling systems removing heat and wind turbines turning the movement of air across the grasslands into power.
The next time someone asks a chatbot a question, part of the answer may begin with the wind passing through the grasslands of Inner Mongolia – transformed first into electricity, then computing power and finally into the words that appear on a screen.


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Fueled by cheap wind power and a cool climate, Inner Mongolia’s Ulanqab is turning energy produced in its pastureland into power for the AI boom


Fueled by cheap wind power and a cool climate, Inner Mongolia’s Ulanqab is turning energy produced in its pastureland into power for the AI boom.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Fueled by cheap wind power and a cool climate, Inner Mongolia’s Ulanqab is turning energy produced in its pastureland into power for the AI boom

Fueled by cheap wind power and a cool climate, Inner Mongolia’s Ulanqab is turning energy produced in its pastureland into power for the AI boom