Despite the relatively high capital cost of Waste To Energy (WTE), the central government of China has been very proactive with regard to increasing WTE capacity. One of the measures brought in provided a credit of about $105 per MWh of electricity generated by means of WTE rather than by using fossil fuels. Chinese Vendors are now eying the opportunity to bring this Technology “turn key” including partial finance to developing countries including Thailand and ASEAN…
Extract of “Research Report on China Waste Incineration for Power Generation Industry, 2014-2018”
Published in March 2014 by ReportsnReports
With the development of Chinese economy, upgrading of urbanization and changes of lifestyle, waste output keeps increasing, leading to serious environment pollution. Many cities are faced with garbage disposal problems. China has the most waste output in the world with more than 7 billion tons of untreated municipal solid waste that occupies over 3 billion square meters of land.
Out of the 668 cities in China, two thirds are surrounded by garbage. In onefourth of the cities, garbage has to be transported to nearby rural areas, which brings about secondary pollution such as underground water contamination and stench.
The Twelfth Five Year (2011-2015) Plan of the Construction of Municipal Solid Waste Treatment Facilities issued by Chinese government states that harmless garbage disposal rate in Chinese cities will reach 90%, and that in rural areas will be 70% in 2015. To achieve this goal, Chinese government launched a series of policies to encourage Waste Incineration for Power Generation projects.
The national benchmark price of waste power generation was 0.65 CNY/kWh (tax included) in April 2012. The raised ongrid power tariff of waste power generation, tax preference and subsidies greatly promote the revenue and profitability of waste power generation enterprises.
In addition, environmental policies in China become stricter and public awareness of environment protection increases, which both promote the development of waste power generation industry.
The waste incineration rate in China is between 15% and 20%. It is predicted to be 35% in 2015 and the national daily disposal capacity of municipal solid waste will be more than 870 thousand tons. Cities in China currently use landfill, compost and incineration as methods of garbage disposal. The former two methods are constrained by land capacity and environment protection, making incineration the best method for garbage disposal.
China is entering a golden age of Waste Incineration for Power Generation. For instance, major cities compete to establish waste incineration power plants, and enterprises spend a large amount of money on mergers and acquisitions between Waste Incineration for Power Generation businesses.
From a regional perspective, waste incineration scales in some key areas will increase sharply. The top five regions are Chongqing, Hainan, Shanghai, Beijing and Guangxi. The planned treatment scale in 2015 will be 58 times larger than that of 2010.
The total investment in Waste Incineration for Power Generation projects will reach CNY 100 billion. In China, there are dozens of investors in the field of Waste Incineration for Power Generation.
In China, the waste incineration industry chain consists of waste incinerator, equipment integration and project contracting, and waste incineration operations.
In the industry chain, equipment enterprises mainly engage in the production and selling of waste incineration facilities while engineering companies mainly provide technology support and installation of facilities for operating enterprises or downstream enterprises. Investment and operating enterprises are in charge of exploitation, overall plan and operation of waste power generation projects.
Features of waste power generation industry in China include high barrier to entry, sophisticated technology, clear business model, high investment, high return, sustainability, monopoly and government driving.
In the long run, enterprises will not only benefit from government investment but also gain more profit by producing renewable resource products.
The Waste Incineration for Power Generation industry is estimated to develop rapidly in the next few years. On the one hand, waste output continues to increase but the existing equipment has insufficient treatment capacity. As land cost in China increases and environmental protection pressure grows, waste incineration is expected to develop preferentially. On the other hand, the industry is favored by investors due to clear development plan and profit model.
It is predicted that annual growth rate of waste power generation industry in China will be 20% in the next few years. Its industry revenue will rise from CNY 3 billion in 2010 to CNY 20 billion in 2020.
A way for Thailand and ASEAN to tap into China expertise
Our close partner GreenCity works as a collaborative platform which runs as a shopping mall for green tech. We have over 50 suppliers from China to provide quality, certified green tech and equipment to our clients.
Under our shopping mall business concept, we provide an inventory of equipment for solid waste including Waste to Energy, waste water, emission, renewable energy, and energy saving projects. All the suppliers listed under GreenCity meet high standards.
They have experience of overseas exports and possess international certificates for their equipment. GreenCity brings in the added values for our clients by allowing easy merchandising of green tech, monitoring quality with legal protection, enhancing China’s ability to bid for tenders in international standards.
In short, GreenCity fills in the gap where China’s suppliers in general are not offering to international buyers. We bridge the gap by making affordability factor available hence our clients’ projects can reach financial sustainability. This is the major challenge that hinders developing countries to tackle green issues. GreenCity enhances financial sustainability.
Revenue generation & cost recovery
Much of the GreenCity equipment can turn waste to products for revenue generation. Waste to Energy, Organic waste to fertilizer, plastics and sludge to bricks, landfill recovery and others allow municipalities and localities to recover the cost of the projects.
Public-Private Partnership (PPP)
GreenCity equipment enhance the possibility of PPP because of the lower fixed cost on machineries and how our equipment is designed to easily match local environments. At the end, the private sector (including households) only needs to pay a minimal portion of the cost while most of the cost is offset by the revenues generated. See example of Thailand 2014 PPP model
We work with financing options through the banks in China (commercial loans) or the potential of other investment programs (aid programs by China or other international donors). As a viable partner we create the case with our clients for the financing application.
Total Cost of Ownership advantage
In most cases, our GreenCity equipment is roughly one-fifth of an EU equivalent and one-third of a Japan equivalent. Our equipment of 25-years life cycle is sufficient for any municipal needs.
Example of procedure for municipality package
GreenCity has built a consortium of suppliers and green tech design institutes. Once the municipality confirms a go-ahead, our tech design institute will work side by side with three parties in your local region:
- Local government for setting green bench- marks
- International donor/ banks for deliverables during payback periods
- Local agencies for implementation and feasibility check.
Our tech design institutes are accredited and share the local understanding to draw out the best suitable plan for the city. All of our China equipment and technologies will be integrated into the master plan.
Our ultimate goal is to achieve a high degree of integration among deployed equipment for maximize performance and best environmental and socio impacts including measurable successes such as green job creation, environmental protection, social equality, tech transfer, and capacity building.
Other local engagement will include recruitment of local buyers for revenue generating by-products from our equipment, local agencies , local private companies who will carry out parts of the execution
Waste management becomes a critical environmental and health issue and take the case of Thailand and ASEAN with landfill management (including uncontrolled incineration) and we are here to make the link with China Green Tech
3 key points in Thailand showing the market readiness to embrace Waste to Energy Technology on a big scale and GreenCity is in advanced negotiations to capture the opportunities
- Some specific incentives are given to Investors through the Very Small Power Producer (VSPP) scheme below 10 MW
- Thailand aggressive electricity purchase tariffs expected to be applied for WTE by end 2014: 5.66 THB per KWh (175 US$ per MWh) investors contractual rate for 25 years
- Carbon credit task force is getting soon ready to embrace this new Green and potentially very lucrative trading opportunity
Green City: “China outside, Global inside”