Eric Ng – SCMP | Updated on Oct 27, 2008
Energy conservation and pollution reduction are industries that have been around for decades, but their fastest growth could well lie ahead given the mainland’s status as the world’s factory and rising pressure for it to get its act together on sustainable development.
Manufacturers can either install the necessary equipment on their own or outsource the job to so-called energy services companies (Escos). Escos typically examine a firm’s energy consumption efficiency and provide solutions to achieve desired targets. They usually share the financial reward from the energy-saving effort with their customers at a pre-agreed formula over multiple years.
Eric Jiang Haibo, South China sales manager of US-based industry major Honeywell, says the company generally does not require its clients to modify their production processes, and its solutions can achieve 15 per cent to 30 per cent of energy savings. “On the mainland, clients tend to be interested if an energy-saving project can pay itself back in two to four years,” he said. “Those with payback periods of more than five years tend to have a hard time moving factory owners into action.”
Honeywell entered the mainland market in 2005. Mr Jiang said its first project was for a brewery in Shenzhen, which contracted Honeywell to save 5.4 million yuan (HK$6.13 million) a year, or 17 per cent of its energy bill.
He said a major obstacle in pushing energy conservation was management’s preoccupation with production or other issues. “I had a customer who kept delaying signing a contract with us as his firm underwent production adjustments, although he knew the payback period was less than two years.”
Focus Energy, a Hong Kong start-up established in 2006, is also pitching projects to help firms save money by revamping their air-conditioning, boiler and water systems.
Managing director Simon Cheung said a new policy in Guangdong requiring all factories to cut sewage discharge by at least half from between 2006 and 2010 and Beijing’s recent rule requiring all cement plants to install waste-heat recovery systems had proved to be a boon.
He said a chrome-plating plant consuming 700 cubic metres of water a day could save some 29 million yuan over 10 years by investing 7 million yuan in a three-year period.
A typical cement plant with daily output of 2,500 tonnes could achieve breakeven in 2.4 years after investing 60 million yuan in equipment that would allow it to capture heat from the production process to generate 25 million yuan worth of electricity, he said.