500 Billion Energy Conservation “Cake”, 10 Stocks Chasing Xiake Color Spinning Co., Ltd..(cnstock.com)
Jun. 27th, 2011
Full Throttle of Energy Management Contract policies reveals a 500 Billion “Cake” in Energy Conservation and Environmental Protection
A density of supportive policies and implementation rules for Energy Conservation and Environmental Protection (ECEP) industry is around the corner. Xie Ji, deputy director general of Department of Environment and Resources Conservation of NDRC expressed on June 25th that they are studying to launch the Energy Conservation and Environmental Protection Industry Development Plan. During the 12th Five-Year Plan, energy conservation service industry will leap into a high-speed development period from the current promotion. Over the next five years, the number of domestic energy efficiency service providers will exceed 1000 and the market will boost to 300~500 billion.
Department of Macroeconomic Research, Development Research Center of the State Council recently published China Energy Conservation Service Industry Development Strategy Report in Beiing that “energy conservation supermarket” is a prospective critical mode for overall integration of China’s energy conservation service industry chain.
An Expected 500-billion ECEP “Cake”
Xie Ji, deputy director general of Department of Environment and Resources Conservation of NDRC expressed on the 25th “2011 China Energy Conservation & Environmental Protection (ECEP) Industry and Capital Market Forum” that NDRC and other ministries were studying ECEP Industry Development Plan and 12th Five-Year Plan of Environmental Service Industry to secure rapid development of this industry and will issue related implementation rules based on issued preferential fiscal and tax policies to develop energy conservation service industry and Energy Management Contract.
According to Mr. Xie, during the 12th Five-Year Plan, the government will lay priority on energy conservation reform and EMC in public buildings. Apartment from central fiscal incentives, local governments are required to provide subsidies worthy of not less than RMB60 for each ton of standard coal for reform project. Meanwhile, a variety of implementation rules are upcoming based on last year’s fiscal and tax preferential policies for EMC projects.
Southern Metropolis Daily noticed that Provisional Measures for Administration of Fiscal Incentives for Technical Reform of Energy Conservation published at website of Financial Department on the 24th stipulated rewarding qualified energy conservation reform projects on a lump-sum basis and that during the 12th Five Year plan, qualified projects would be rewarded lump-sum funds equivalent to RMB240/t of standard coal in the East and RMB/300t in the Middle West.
Mr. Xie also stated that energy conservation service industry would leap into a high-pace development from the current promotion stage during the 12th Five Year Plan. Over the following five years, domestic energy efficiency service providers were expected to exceed 1000 and the ‘big cake’ up to 300~500 billion. The government will support some of the leading enterprises.
“For quite a long time, China’s ECEP will keep a CAGR of 15%-20% and the output value is estimated to exceed RMB4.5 trillion.” Chen Shuguang, vice president of China Energy Conservation & Environmental Protection Group concluded optimistically.
“Gold Rush” with Capital in a “Virgin Land”
In the Outline of the 12th Five Year Plan, the government declared the target of reducing energy consumption by 16%, carbon emission by 17% and raising the proportion of non-fossil energies up to 11.4% over the following five years. As the percent of industrial energy consumption to the gross energy consumption accounts up to 71.6%, improving industrial energy consumption rate is critical to energy consumption reduction.
The release of needs of energy conservation service market attracts capital investors to explore opportunities in this virgin land.
Mr. Chen cited EMC as an example, “Eight high energy consumption industries: electrolytic aluminium, iron alloy, steel, calcium carbide, caustic soda, and cement, are the focus of emission reduction during the 12th Five Year Plan, exploring a broad market for EMC and attracting capital inflow. Statistics showed that China’s EMC project in 2009 amounted to 19.532 million at a year-by-year increase of 67%. The proportion of EMC projects to national gross energy conservation investment rose up to 54.2% from 2008’s 46.1%. Take Jintongling (300091, SZ) for example, its main product centrifugal fan targets at high-end market. 70% of the products are energy saving and environmental friendly. The company is raising 600 billion for opening wholly-owned subsidiaries engaged in exploration of ECEP devices to seize the dominating opportunities during the 12th Five Year Plan.
Voice of experts
Li Jianwei, deputy director general, Society Department, Development Research Center of the State Council
Energy Conservation Supermarket, an effective way to solve capital problem
Up to now, nationwide energy service providers have increased to over 800 with the gross capacity of 84 billion. The total industry scale even surpass that in Germany (500), but one German enterprise may compete hundreds of Chinese enterprises.
An emerging mode of energy conservation service development is Energy Conservation Supermarket invented by Great Ideal Energy Saving Investment. It is an integrated energy saving service platform like a supermarket to promote energy efficiency products and service by integrating suppliers and customers.
The big challenge of EMC is more demanding for early investment and longer period of return. However, Energy Conservation Supermarket can be an effective countermeasure for enterprises to subscribe proper energy efficiency products in Energy Conservation Supermarket, just like people buy vegetables in supermarket (Southern Metropolis Daily)
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