Khoo says that it is expected that RMB10.8-13.6 billion (US$1.8 – 2.2 billion) of new investment will be required over five years in the Chinese desalination market |
Investment opportunities
In February 2012, China's State Council announced its 12th Five-Year Plan (FYP) for desalination, establishing a higher than expected target of 2.2 - 2.6 million m3/day of online capacity by 2015, versus less than 1 million m3/day today. The all-powerful NDRC (National Development and Reform Commission) has been delegated with the task of spearheading the development of the desalination sector to ensure that it meets its targets.
Meanwhile, it is believed that the government will extend subsidies and preferential financing policies to seawater desalination projects, support initial public offerings or bond sales by related enterprises and encourage private investment into the industry. All in all, it is expected that RMB10.8-13.6 billion (US$1.8 – 2.2 billion) of new investment will be required over five years.
One of the goals of the 12th FYP for desalination is to increase domestic equipment production so that it provides 70% of all equipment used in desalination plants – a policy similar to that used to build up the country's wind energy industry a few years ago. In fact, besides the similarity to the wind energy industry, the aim of the government's plan for the Chinese desalination sector seems similar to what was achieved in the areas of rail and aviation. While foreign technology is still welcomed into China, it seems that the government is trying to produce the whole value chain domestically.
In March 2013, in the latest move to boost the development of the desalination sector, the NDRC announced the first batch of regions and companies that have been selected to carry out seawater desalination pilots.
The list includes the cities of Shenzhen in Guangdong, Zhoushan in Zhejiang, Luxixiang Island in Zhejiang, Binhai New Area in Tianjin, Bohai New Area in Hebei and several industrial parks and companies.
Eventually, the list will grow to include about 20 pilot projects by the end of the 12th FYP. The NDRC has asked the listed regions and companies to actively promote the application of desalted water and encourage its use in daily supplies.
Market activity
Against the backdrop of the Chinese Government's focus on desalination, Abengoa, IDE Technologies, Aqualyng and Hyflux are already in the thick of the action.
Abengoa has started commercial operations at a 100,000 m3/day plant in Qingdao, which it will operate and maintain for 25 years. Hyflux has also developed China's largest membrane-based seawater desalination plant in Tianjin Dagang, which has a current designed capacity of 100,000 m3/day that is expandable to 150,000 m3/day.