中国における海水淡水化市場

Abstract

China needs more water. Everybody knows it. But two great unknowns remain: which solutions will be favoured by Chinese authorities to address this problem and to what extent the supply gap will be filed. Demand projections are one thing, and closing actual deals another entirely. If future demand was all that mattered then Britain would be a huge market for transport projects. Still, new road and rail projects are few and far between in the UK. In China, the market for desalination projects and technologies is brand new and, on paper, offers immense opportunities. But how much desalination capacity will really be built in China, where and by whom? How are decisions taken on project planning and who are the key individuals influencing them? How much of the desalination market will be captured by local Chinese companies? When will Chinese desalination companies be in a position to bring ‘the China Price’ to your doorstep and make a dent in your domestic market? GWI’s latest report “Market Access: Desalination in China”, the first of a new series of market intelligence reports, is the best attempt so far at answering these questions and many more. Its Authors, Olivia Jensen & Frederic Blanc-Brude unveil a couple of its secrets.

The fundamentals are in place

In some parts of China, the absence of conventional water solutions has made desalination a necessary choice. Big coastal cities are increasingly suffering because of water shortages. China’s industry lost RMB200bn (US$24.7bn) in output value annually from 2001 to 2005 due to water shortages, according to the statistics released by the State Flood Control and Drought Relief Centre in 2006 (Some Chinese officials put the figure at RMB300bn).

The north of China is the most affected. Four coastal provinces in particular are expected to have a combined demand gap of 16.6 to 25.5 billion cubic metres a year by 2010. These four provinces represent 25 percent of China’s GDP.

In this context, desalination has recently received increased political support. In July 2005, the State Oceanic Administration, the State Development and Reform Commission and the Ministry of Finance issued a “special plan for the use of water”, affirming full central government support for the development of desalination as a national high-tech industry. A year earlier, the Energy Reform Commission and the SDRC had issued directive 864 [2004], which requires that coal-fired power plants being built or planned in water-deficient areas be prohibited from accessing groundwater, that their use of surface water be strictly controlled and that, in coastal areas, combined power and desalination systems be preferred. And this trend is also spreading to other industries as water supply solutions are increasingly being tied with industrial development planning. For chemical and petrochemical zones, the government sets limits on the abstraction of surface and groundwater, and developers must present a water source development plan as a condition for project approval.

Such developments suggest that the future of the desalination sector in China will be, in part, driven by large industrial projects for chemicals and oil & gas industries and power plants, including several planned nuclear plants which will have integrated desalination facilities. A further boost to desalination demand is coming from the relocation of heavy industry from Beijing and other inland facilities to designated new development zones on the coast.

Finally, municipal water tariff reform is ongoing in coastal areas and a convergence between water tariffs and the cost of desalination is expected by 2010-2015, according to Chinese officials and informed observers. The development programme sponsored by SDRC envisions three to four “industrial bases” for the desalination industry, and three to five “pilot cities” situated along the north-eastern coastline and where new desalination projects will be encouraged and supported.

According to our research, in 2006, online installed capacity in China (including HK and Macau) was 380,000m3/d. The forecast desalination capacity for 2012-15 is 2.5Mm3/d.

The size of the desalination project market (capex) was US$55-70m in 2006 and should reach US$600-860m in 2012-15.

The next opportunities will be captured by the informed few

The Chinese desalination market is, for now, a small world. Most aspects of the sector, from engineering research to project approval and advising the central government are monopolised by a small group of individuals. In a typically Chinese fashion, local competition originates in the research and academic sector. A couple of dedicated research institutes have been working on desalination for several decades and a handful of active individuals, which we call the “professor-entrepreneurs”, have set up corporate entities attached to these research institutes that compete with foreign companies for project development contracts and the supply of membranes and other equipment. In 2007, the professor-entrepreneurs are a dominant force in the Chinese desalination market.

These individuals have also been instrumental in the successful market entry of a number of foreign equipment makers, who managed to have key products featured in the kind of ‘pilot’ or ‘model’ projects of which Chinese government officials are so fond.

At the moment, such good connections are essential to do business in this market. In certain segments, like energy recovery, they explain most of the difference between profitable and loss-making Chinese ventures. “GWI Market Access: Desalination in China” draws on interviews carried out in China with all the key actors and contacts in this market and brings you their views and details, down to their mobile phone number.

Understanding the market structure is essential

The use of desalination processes in China is different from world averages. China is a young desalination market and there is wider use (and planned use) of MED, while most of the small number of MSF facilities have been decommissioned.

RO is the dominant technology in terms of number of projects but the planned capacity for the power and petrochemical sectors will mostly use MED. Nuclear desalination should play an important role in China beyond 2010. The municipal and industrial markets for desalination are also not evolving at the same pace. Industrial solutions have so far dominated the market in terms of installed capacity, and will continue to do so.

Water tariff reform in cities is ongoing and average tariff levels will not reach sufficient levels for another 5 years at least, holding back the municipal market in a number of cities. In a selected number of cities however, municipal governments have already reached the level of development and wealth to be planning desalination projects. Other proposed plants are mostly linked to nuclear power stations and other very large projects. Thus, it will be essential to be chasing the right projects at the right time and in the right place.

Indeed, the first attempts at service contracts/BOT-type desalination projects have had a difficult time taking off. “Desalination in China” brings you the inside story on the SWRO BOOs that never seem to close in northern China and the institutional and political pitfalls that project developers have to navigate.

Ignoring the Chinese desalination market would be a mistake

The desalination equipment market is split between what Chinese suppliers can already provide and the products that only foreign companies can provide. Chinese makers are catching up fast. Most foreign equipment makers reckon that they will face direct Chinese competition within five years if they do not develop a new generation of systems.

GWI’s latest market intelligence report examines the state of Chinese desalination R&D and what Chinese engineers can do to compete with foreign equipment makers. It surveys the Chinese SWRO membrane market and the four Chinese companies that can now make SWRO membranes. The report also reviews the state of local competition in several key segments (energy recovery, pressure vessels, pumps, etc.).

Equipment makers now have to become involved and develop their brand name early on (the professor-entrepreneurs can be very helpful for this). This turns out to be the best way to secure orders when the larger projects come to market.

Some patience is, however, required. The risks are significant (especially copycats) but the alternative (waiting for the Chinese desalination market to develop) is a non-starter. If you do not gradually give away your products to the Chinese market, your competitors will and before you know it, Chinese makers will be competing against you at home!

Over the next five years, the desalination sector will come of age as an industrial sector in China. Sector growth will then accelerate; larger projects and service contracts will become viable and the continued industrial development of China will drive a significant share of the demand for desalination capacity. Likewise, tariff reform and the entry of desalination into the mainstream of municipal infrastructure procurement will generate increasingly important demand for projects. By 2015, full made-in-China desalination solutions will be exported worldwide and capture a significant market share in the Middle East and in Europe.

To benefit from these opportunities, gaining a foothold and securing a reputation in today’s desalination sector in China is pivotal. Establishing a long term relationship with some of the most influential Chinese individuals involved in the sector will bring sustained rewards, as will finding the right Chinese partner to distribute and even manufacture in China.

“GWI Market Access: Desalination in China” is the first step on this journey.

Table of Contents

5 Minute Report

• 10 Things you need to know about Chinese desalination
• 5 Recommendations
• Who’s Who?
• The Map of Chinese desalination

The Brief

• From Liaoning to Zhejiang: planning for desalination
  • Drivers
  • Projected Capacity
• How Projects Get to Market
  • Institutional Set Up
  • The Project List
• Market Development and Potential
  • Market Developments
  • Market Size
  • Municipal vs. Industrial Clients
• Research & Technology Trends: past, present, future
  • Brief History
  • Research Trends
  • The Future: RO or Thermal?
• Competition Analysis
  • Developers & EPC Companies
  • Can the Chinese make RO membranes?
  • ERD, HP Pumps and Pressure Vessels
• Reality Check
  • Risks
  • 2010-15 What is realistic?

By Invitation: Jun He’s George Zhu

• Selected legal issues on developing desalination projects in China

Economics:

• Market development and forecast
• Unit cost analysis

The List: Planned, awarded and operational projects

Case Studies

• Huangdao MED and RO
• Tianjin TEDA MED
• Huanghua MED
• Yuhuan RO

The Players

• Projects: Key active players
• Projects: Other active players
• Projects: New Entrants
• Equipment: Membranes
• Equipment: HP Pumps/ERD
• Equipment: Pressure Vessels
• Equipment: Metals and Alloys

Glossary