Market Opportunities in the China Desalination Plant Market

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Frost & Sullivan Analyst Briefing on Market Opportunities in the China Desalination Plant Market

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Market Opportunities in the China Desalination Plant Market

  1. 1. Market Opportunities in the China Desalination Plant Market Melvin Leong, Program Manager Environment & Building Technologies 22 Dec 2011
  2. 2. The Line-Up 1 WHAT’S HAPPENING GLOBALLY? 2 DESALINATION PLANT MARKET IN CHINA 3 KEY TAKEAWAY2 2
  3. 3. Before confusion starts… What is meant by DesalinationPlant Market? Desalination Plant*: Plants and equipment used in the 1 treatment of seawater and brackish water, including all treatment components and civil contractors Design Service and Engineering: Technical and 2 engineering design and consulting, construction and project management of desalination plants Utility Service: Attributed to water supply provided by both 3 private companies that operate treatment plants as well as public utilities. * Unless otherwise specified in this document3 3
  4. 4. What’s happening globally? 4
  5. 5. Costs of desalination are expected to be reduced furtherduring the next 5 to 10 years Cost will still depend on: •Plant location •Plant size •Energy cost •Pipeline for intake and discharge •Type of technology 5
  6. 6. Exponential growth in desalinate water capacity since1990 6
  7. 7. Middle East continues to soar, Asia Pacific remains assecond most important region Note: Desalination plant market refers to only membrane technologies, and thermal / distillation technologies for desalinatio n of sea water, brackish water, river water, and wastewater excluding pumps, valves, and civil structure. Source: Frost & Sullivan 7
  8. 8. RO continues to dominate the desalination market inAsia Pacific by market revenue Note: Desalination plant market refers to only membrane technologies, and thermal / distillation technologies for desalinatio n of sea water, brackish water, river water, and wastewater excluding pumps, valves, and civil structure. Source: Frost & Sullivan 8
  9. 9. China leads in Asia Pacific in terms of market revenue Note: Desalination plant market refers to only membrane technologies, and thermal / distillation technologies for desalinatio n of sea water, brackish water, river water, and wastewater excluding pumps, valves, and civil structure. Source: Frost & Sullivan 9
  10. 10. China is the largest trading nation in Asia Pacific forwater filtration and purifying equipmentTrade Value (Exports and Imports) of Water Filtration and Purifying Equipment, 2008-2012 Source: UN Comtrade, and Frost & Sullivan 10
  11. 11. Desalination Plant Market in China What is the market status? Who are the main end-user groups?Who are involved in the market? Notable participants? The status of China’s value chain? What are the likely opportunities? Key highlights in 2011? 11
  12. 12. Moving forward, more desalination projects will becarried out In 2011, membranes from Toray are supplied to a plant in Qingdao of 100,000 m3/day capacity Source: Frost & Sullivan 12
  13. 13. Desalination is part of China’s plan for its water securitysolutions Main Driver: The Chinese government’s specific plans on seawater desalination and utilization for the long term Main Main Challenge: Restraint: Water stress and Market Dynamics ever-polluted natural Lack of financing water resources; support from Uncertainty on the Chinese financing sources in government the emerging desalination industry Source: Frost & Sullivan 13
  14. 14. Positive growth expected in 2012; RO+MED hybrids areemerging Percent of Revenues by Desalination Revenue and Growth Rate of Technology (China), 2010-2012 Desalination Plant Market (China), 2010-2012 Percent of Treatment Capacity by Desalination Technology (China), 2010 Source: Frost & Sullivan 14
  15. 15. Domestic RO is most competitive, but imported RO is preferredUnit Investment Price Variation for Investment Comparison Domestic Equipment 15
  16. 16. Industrial application dominates; drinking water application may see good prospects for future investment Percent of Treatment Capacity by Coastal regions to witness increase in Industrial Sector (China), 2010 Gwe by rate of 15 to 20 percent Water requirement will remain high with this emerging sector There are ongoing relocations of steel plants from inland to designated new development zones coastal regions Currently, plants are built for industrial purposes. The future will see more Emerging: Salt Production Plants application for drinking water whenSalt production is likely to be included detailed economic analysis is in 4-in-1 circular economic streamlined development mode (power- desalination-brine salt production- land management) Source: Frost & Sullivan 16
  17. 17. Public tendering is dominant; market is driven bypolicies and guidelines Control and provide project opportunities (Power design institutes provide desal. plant Government design) Select proper equipment and EPCs products. May outsource M&E or part of projects to contractors. Manufacturers Product supply and technical support End-users Responds to government’s plan and implementation. Work closely with EPCs and manufacturers too Source: Frost & Sullivan 17
  18. 18. At least 80% market share is held by internationalsuppliers Source: Frost & Sullivan 18
  19. 19. Forward integration and backward integration is likely totake precedence Membrane • Suppliers of raw polymer materials materials Membranes • Manufacturers of membrane elements, fibers, sheets • Technical experts in membrane units and water Modules treatment Integrators • Specialized in design and construction of plants Source: Frost & Sullivan 19
  20. 20. Desalination to integrate with renewable energy plants Rise of output by 60 percent to 18.8 kWh in Q1 2011, at least 30 percent higher than other renewable source 1.8 GW of new solar panels installed in non-residential Chinese buildings in 2011 China aimed for 86GW of nuclear energy output by 2020 Early stage of development with sporadic contracts 20
  21. 21. Some competitive developments in 2011… HK will build a IDE Technologies will build desalination plant 4 MED units powered by in 2014. It is in waste heat from other planning stage sources for Tianjin SDIC GE doubled its membrane now. electricity company manufacturing capacity in its Wuxi plant; first expansion in 2008 Hyflux will build 3 BOT projects in Tri-Tech Holding acquired Chongqing JY International (aUnited Envirotech has manufacturer ofannounced its plan to desalination and industrialacquire Aton wastewater system) forEnvironmental (Shenyang) $1.5 million Source: Frost & Sullivan 21
  22. 22. Key Takeaway 22
  23. 23. Market boom as water demand rises for industries andurbanization - 6% market growth - At least 7% market growth 2011 2012 and beyond - RO dominates - Hybrids will gain market share - Industrial applications - More uptake of drinking water applications - 670,000 tons of water /day - 800,000 tons / day of water (>2 million tons / day by 2015) - 80% imported equipment - 70-80% imported equipment - 3 important documents as industry guidelines - 2 policy documents by NDRC as long term supporting guide International expertise is sought - More local R&D development will be - Value chain integration is expected sporadic; involves some participants - Value chain integration is the way forward for business sustainability and diversification - Acquisitions - Acquisitions to continue; divestment by - Heads-on competition some companies Hybrid plants (desal-renewable - More JVs, partnerships among suppliers energy) are on the rise More pilot plants with various renewable - Government support and focus is energy sources high; incentive and funding is low - More emphasis and focus under the 12FYP; - Turnkey projects are common incentive and funding may still be unclear - Current opportunities: General - BOT and BOO likely to gain interest industrial applications - Next big opportunities: Municipal applications, steel industry, and power plants Note: NDRC denotes National Development and Reform Commission. Source: Frost & Sullivan 23
  24. 24. Follow Frost & Sullivan on Facebook, LinkedIn,SlideShare, and Twitter 24
  25. 25. For Additional Information Donna Jeremiah Carrie Low Corporate Communications Corporate Communications Asia Pacific Asia Pacific +603 6204 5832 +603 6204 5910 djeremiah@frost.com carrie.low@frost.com Melvin Leong Program Manager Environment & Building Technologies apacfrost@frost.com 25

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