Most of WiC’s coverage of China’s renewable energy future has peered skywards, primarily at the prospects for wind and solar power generation.
China Business News is keener to keep things much closer to earth, with its coverage of a recent $25 million investment by clean-tech VC firm Tsing Capital in Nobo New Energy Group.
Nobo specialises in geothermal or ground source power, through the supply of heat pumps.
When installed in buildings, the pumps can offer savings of 20-50% on heating bills, says The Climate Group.
Heat pumps work in a similar way to refrigerators. Just as a fridge extracts heat from food and pumps it out into the kitchen, a heat pump can take heat from the earth and pump it into a building. In summer the reverse is possible, with heat transferred back into the ground, allowing for a cooling effect.
The pumps circulate a mixture of water and antifreeze around a loop of pipe buried in shallow trenches close to a building. Compression techniques super-charge the fluid to higher temperatures. Larger buildings needing more heating will often bore pipe vertically, down to a 100-metre depth.
The principle is the same. When the liquid travels around the loop it absorbs warmth from the ground, which can then be used for heating.
So how is uptake in China? The US National Renewable Energy Laboratory forecasts that sales of ground source power will pass $1 billion by the end of next year, more than double those of 2005.
The biggest obstacle is the level of upfront investment required. Installation costs are high.
This rules out most residential users, so Nobo’s strategy has been to target hotels and public buildings, where the potential for energy savings might outweigh concerns over the initial investment.
Still, the technology has its critics who counter that the pumps can have difficulties meeting spikes in heating demand and that they are still relatively untested in large installations.
Nobo’s response is to promote two new products; one that can scale up output more reliably for larger buildings, and another that allows a building’s heating to switch between geothermal power and more traditional forms of heating.
The modifications are designed to convince landlords that Nobo can heat their buildings in a reliable and low-risk way.
This still leaves the issue of the high upfront investment to resolve. In other countries, government subsidies have provided some offset and there has been some support in China too (Beijing offers a one-time subsidy of Rmb35-55 per square metre of ground-source heated floor, for instance).
General trends in renewable energy policy may make this more common. Local governments in Shenyang, Chongqing and Qingdao are already especially active in promoting usage.
Still, Nobo isn’t sitting around hoping for greater government largesse. It is also setting up as an energy management provider, offering a combination of hardware, installation and ongoing management services.
Under the terms of these contracts (usually 15 to 20 years in duration) the client then manages to avoid the majority of upfront expense. Nobo – which commits to providing heating services at a contract cost – gets to keep most of any future margin on the business in exchange.
This kind of turnkey solution is probably going to be a more attractive option for property developers. They have often been reluctant to fit their new buildings with renewable power – doubting they can pass on the upfront cost in premium prices for apartments.
As new apartment blocks offer the heat pump industry its best growth opportunity, the property magnates are the ones who will need to be convinced.
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