According to reports, listed companies in the environmental protection fields such as Jiulong Electric Power and Longyuan Technology have successively laid out relevant production lines, and small and medium-sized environmental protection engineering companies across the country are also trying their best to occupy the market.

One hundred billion market potential

As a harmful exhaust gas, nitrogen oxide has become one of the major sources of atmospheric pollution in China. In 2010, the Ministry of Environmental Protection (hereinafter referred to as “the Ministry of Environmental Protection”) issued a notice stating that the state will control the total amount of nitrogen oxide emissions during the “12th Five-Year Plan” period. Statistics show that thermal power plants are the main source of nitrogen oxides emissions, so they have to adopt mandatory measures for flue gas denitrification.

The National New Deal is spawning a huge market.

The Environmental Planning Institute of the Ministry of Environmental Protection’s research institute has listed flue gas denitrification as one of the key areas of the “12th Five-Year” environmental protection industry, and issued a report predicting that the total investment demand for flue gas denitrification in thermal power plants during the “Twelfth Five-Year Plan” period is About 50 billion yuan, operating costs 20 billion to 30 billion yuan / year. After analyzing the relevant data, Huachuang Securities concluded that by 2020, the capacity of flue gas denitrification in thermal power plants will approach 100 billion yuan.

We are optimistic about the prospects, prompting small and large enterprises in the environmental protection field to flock to the denitrification market.

Investing 300 million yuan to build two production lines A private enterprise in Jiangsu is not hesitating to invest in the denitrification market. Yu Guangxi, executive vice president of Jiangsu Wande Electric Power Environmental Protection Co., Ltd. (hereinafter referred to as “Jiangsu Wande”), introduced that in early 2010, companies started preparations and research and aimed at the core catalyst in the denitrification industry.

A technical person introduced that the catalyst is the core material for flue gas denitrification, and the quality of the flue gas directly determines the level of flue gas denitrification. For a long time, the imported catalysts of superior technology and technology have occupied the market.

At the moment, the outbreak of the market will bring huge new capacity to the catalyst market, and it will also provide domestic catalysts with an opportunity to replace imported products. At present, Jiangsu Wande's two production lines are under construction at the same time. In June 2011, the production capacity will be released and the annual production of catalysts will be 10,000 square meters. “We are negotiating with several home appliance companies under the State Power and Huadian Power Co., Ltd. The sales channel has been basically confirmed,” Yu Guangxi said.

Despite promising prospects, market competition is extremely fierce. At the end of 2010, China Power Investment Yuanda Environmental Protection Engineering Co., Ltd. (hereafter referred to as Yuanda Environmental Protection) invested 30,000 yuan to build the largest denitrification catalyst production base in China. Yuanda Environmental Protection is a subsidiary company of the listed company Jiulong Electric. It is backed by China Power Investment Group and has a promising market. The other two listed companies in the environmental protection field, Longjing Environmental Protection and Guodian Longyuan, have also stepped into the catalyst field.

In addition to the powerful listed companies, Jiangsu Wande’s opponents also include dozens of environmental companies of various sizes across the country.

However, the denitration market is not limited to the production of catalysts. In early 2010, the Ministry of Environmental Protection issued the "Policy for Prevention and Control of Nitrogen Oxides from Thermal Power Plants," clearly stating that low-nitrogen combustion technology should be the technology of choice for controlling nitrogen oxides in coal-fired power plants.

“The principle of SCR technology using catalyst denitrification is tail denitrification,” explains Xie Tianhui, an energy conservation and environmental protection industry analyst at Huachuang Securities. “Low-nitrogen combustion technology solves the problem at the source and controls nitrogen oxides in the combustion process. ”

According to a researcher from the Environmental Planning Institute of the Ministry of Environmental Protection, the state began to promote low-nitrogen combustion technologies in 2004, and in 2009, all newly installed units must increase their low-nitrogen burners. At present, there are major environmental companies involved in low-nitrogen combustion technology, and there are also well-known domestic boiler plants such as Harbin Boiler Works.

Capital moves

“We have long looked at this market and we have already invested in it.” A senior investment manager of a state-owned investment group, who declined to be named, told a reporter from the “China Business”. In the second half of 2010, the manager made a special trip to Chongqing to inspect the environmental protection denitrification catalyst production line. According to him, venture capitalists have been focusing on the denitration market for some time, and even some companies started to lay out as early as in 2009, and companies that have not yet done so have recently been in frequent contact with related companies.

Businesses also feel the enthusiasm of capital. "Recently, many venture capital companies have come to inspect our production line." Yu Guangxi said. According to media reports, the stock price of Yuanda Environmental Protection's parent company, Jiulong Electric, rose by 123.45% for six months. The market performance in the fourth quarter of 2010 was impressive.

At present, capital is focused on the production of catalysts, and a large amount of investment will bring about huge release of production capacity. "Many companies' production capacity will be released in 2011. The catalyst market may be saturated by the end of the year," said the investment manager.

Denitrification or franchising

Compared to capital's enthusiasm for catalysts, other aspects such as the construction of denitrification facilities are not favored.

One person in the industry believes that this is because in addition to the production of catalysts, the profits of denitrification companies in the construction and operation of denitrification facilities are not high, and the return of capital is longer.

“When we invest, we will be very careful to choose companies with high industry credibility and suitable areas for economic development.” The investors mentioned frankly.

This is based on experience in the development of the flue gas desulfurization industry. It is determined that the desulfurization industry is the same as the denitration industry and is an environmental sub-sector that has developed due to national policies. After the "Eleventh Five-Year Plan" countries introduced the policies, the power plants must invest heavily in the construction and operation of desulphurization facilities, but the effect is not satisfactory: For cost considerations, many power plants normally shut down desulfurization facilities, only when the relevant departments to check Operation.

In addition, many unqualified companies have launched hastily, projects have been rigged, and profits have been pushed to the limit. This has caused many companies to survive and the industry has witnessed vicious competition.

In order to solve the above problems, in 2007 the country launched a pilot project of “Desulfurization and Franchising”. At present, the three-year trial of desulfurization and franchising has ended. The China Electricity Council (hereinafter referred to as “CEC”) and other departments are summing up their experiences.

This model is now sought after by desulphurization companies. “Because it can bring sustainable and stable benefits to desulphurization companies,” Xie Tianhui analyzed, companies can also use this to increase their competitiveness and capture the market, and at the same time standardize the thermal power desulfurization market. These factors are all important conditions for enterprises to obtain financing, and they are also conducive to the improvement of industry concentration.

However, the controversy still exists. Can the denitrification industry implement franchising? The environmental planning institutes under the Ministry of Environmental Protection, the China Environmental Protection Industry Association and CEC all declined to comment.

However, Yu Guangxi is very optimistic about the development of the industry: “The desulfurization market is saturated, and companies want to become bigger and stronger, and the transition to denitrification is an inevitable trend.” In his opinion, denitrification also takes the advantage of the development experience of desulfurization industry. BOT road. "This is the direction of long-term development."

Small data

Desulfurization "franchise" model

The desulphurization proceeds of state-owned power companies (such as electricity price subsidies) will be transferred to desulphurization companies by a certain percentage every year, and desulphurization companies will “contract” the construction, operation and maintenance of desulphurization facilities, and they will be handed over to the power companies at the end of a regular period.

Non-state-owned enterprises adopt the similar BOT (Building Management Transfer) model.

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