Environment

Pump priming

Hong Kong blue chip has a ‘hot air’ solution to save energy in Shenzhen

An Empire State of Mind?

‘The greenest brick is the one that’s already in the wall’, is an argument put forward by many an environmentalist. And business leaders are starting to find that the same is true for glass and steel. Energy-efficient retrofits are breathing new life into a number of iconic buildings by bringing soaring utility costs under control.

That’s why Hong Kong-based firm Li & Fung picked the Empire State Building for its New York headquarters earlier this month, its owner Anthony Malkin told Bloomberg TV’s Betty Liu. The art deco landmark was completed way back in 1931, but its recently-concluded $550 million renovation has made heating (and cooling) the offices affordable once again – an important factor Malkin says, since reducing unpredictable utilities bills is a top priority for its Big Apple tenants.

It’s an argument that’s starting to make sense for businesses in China too. The Hong Kong-listed utility China Light and Power (CLP) is betting that companies in Guangdong’s Pearl River Delta can be persuaded to do something similar. Its plan is to help buildings salvage their waste heat and deliver it somewhere productive.

The technology’s nothing new (it was developed in the 1940s), but China’s low energy costs meant the investment wasn’t thought to be worthwhile until recently. That’s no longer the case. Drought in China’s river systems limited the electricity available to many of the coastal factories last year – and the annual tug of war between coal miners and power stations regularly means brownouts.

It’s a problem China’s policymakers have been made painfully aware of recently. “Cold weather in China is expected to intensify over the coming weeks,” an economist told the Platts news service, “and this is likely to exacerbate the squeeze in electric power availability within the country.”

With the National Development and Reform Commission (NDRC) under heavy pressure from utilities to raise the price of electricity, heat pump technology could finally have its day. The trick, say environmental engineers, is to find an adequate source of wasted energy. The most popular solution so far, has been to salvage the heat generated by hotels’ central air-conditioning systems – which is diverted by the pumps to warm up water for showers and baths.

“Because they move heat rather than generate heat,” explains the US Department of Energy, “heat pumps can provide up to 4 times the amount of energy they consume.” The bottom line is that energy bills are cut by as much as 60%, according to CLP. For the Shangri-La hotel in Shenzhen, one of CLP’s first retrofit clients, the savings translate to a little under $100,000 a year (versus what it pays to run a gas boiler). That means the project should pay for itself after three years (it cost around $300,000) – and possibly sooner if energy prices rise.

China plays host to a wide range of energy-intensive businesses ranging from manufacturers to heavy industry. Common sense suggests that a significant amount of energy used to power those operations is wasted as heat, but if the environmental engineers (and government officials) have their way, that won’t be the case for long. If the country is to meet its target of improving energy efficiency by another 20% over the next five years, retrofits like this will likely become far more widespread.


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.