How does energy infrastructure affect corporate innovation? Evidence from ultra-high voltage transmission projects in China

Ultra-high voltage (UHV) transmission projects are a cornerstone of China’s supply-side energy reforms, enhancing the national power system’s balance, efficiency, and resilience. Although their macroeconomic importance is widely recognized, evidence regarding how they affect corporate innovation remains limited. This study investigates the innovation effects of UHV deployment by exploiting its staggered rollout as a quasi-natural experiment. Using a difference-in-differences approach on a panel of Chinese listed firms from 2007 to 2023, we find that UHV deployment significantly boosts firm-level innovation output, increasing patent applications by 13.1 % on average. The effect is stronger in electricity-exporting provinces, central-western regions, areas with weaker grid capacity, and manufacturing firms. Thus, UHV yields higher innovation returns in structurally constrained environments. Mechanism analyses identify two key channels: alleviating financing constraints and facilitating digital transformation. UHV deployment also facilitates regional resource reallocation and supports corporate green transformation. By integrating energy infrastructure into the innovation literature, this study demonstrates that large-scale projects such as UHV serve not only as technical upgrades but also as strategic levers for innovation and sustainability. Overall, the findings offer actionable insights for developing economies seeking inclusive innovation-driven growth amid global green transition.