Issued by the International Energy Agency, the “Market Report Series: Gas 2018” forecast that global demand for natural gas will rise and China will become the world’s largest natural gas importer over the next five years as a result of the country’s economic development and policies to combat air pollution. At the same time, as industrial and commercial markets continue their boom, the industrial sector is set to take over from the power sector as the key growth driver for natural gas.
According to the “Opinions on Promoting Multi-functional, Complementary and Optimised Demonstration Projects” jointly issued by the National Development and Reform Commission and the National Energy Administration, plans are underway for approximately 50 per cent of the new industrial parks to adopt distributed energy systems and approximately 30 per cent of existing industrial parks to improve their energy efficiency by 2020. Thus, distributed energy systems have enormous potential for growth.
Distributed energy systems are highly energy efficient. They generate electricity with natural gas, a clean energy source, while using the residual heat and steam produced in the process for hot water supply and other purposes. As such, the application of distributed energy systems continues to expand. Within the Group, we have been actively investing in distributed energy projects since 2015, and many industrial and commercial parks, tourist resorts and various public facilities in mainland China are now equipped with these stable energy supply systems.
In 2018, we enhanced our investment in the distributed energy business with the launch of two new projects. One of these, located in Guilin in the Guangxi Zhuang autonomous region, is our first collaborative project with a biotechnology enterprise. In addition to distributed energy systems, we also harvest landfill gas generated from sewage and other waste matter, with nearly 30 per cent of the gas collected being used to produce energy. This project has realised our goal to convert waste into energy. Inaugurated last year, TCEI functions as our wholly owned comprehensive energy project investment platform in mainland China. It is principally engaged in the investment and establishment of distributed energy projects. In 2018, TCEI achieved a breakthrough with the establishment of projects in northern, eastern as well as southern China. We expect more projects to be set up in the future which will further increase our market share in this rapidly expanding sector.
Boiler Conversion from Coal to Natural Gas
According to the goals of National Energy Administration, China’s coal consumption proportion should be reduced to 60% in 2017 and falling further to below 58% during the "13th Five-Year Plan" period. We have thus aligned our project development strategies with the nation's coal-to-gas, clean energy and environmental policies to maintain our strong growth in the boiler conversion market.
Furnace Conversion from Coal to Natural Gas
The “Three-Year Action Plan to Win the Battle for a Blue Sky” endorsed by the State Council of the People’s Republic of China (the “PRC”) in 2018 reiterates the country’s determination to drive coal-to-gas conversions, as the country works to raise the proportion of natural gas within the total amount of energy consumed to reach its goal. Therefore, in 2018 we encouraged our customers to use boilers driven by natural gas instead of coal as the latter generates a higher degree of pollution, resulting in a total of 4,450 tonnes of new and modified boilers. Our coal-to-gas boiler conversion projects have contributed to the annual sale of more than 1,200 million cubic metres of gas since 2015. These conversion projects also achieved a yearon-year increase of 56 per cent in gas sales in 2018.
Small and Medium-sized Food Outlets
Capitalising on our forward-looking development strategies and steady gas supply, we are not only cementing our leadership in the small and medium-sized catering market, but also gaining the support of the local governments and the trust of our customers. In 2018, we gained more than 10,000 catering customers. We anticipate that the contribution of this sector to our gas sales will continue to increase with our ever-widening customer base.
Natural Gas Water Heating System
In terms of industrial and commercial applications, our project companies play a proactive role, not only selling natural gas to customers, but also installing water heating systems and large-scale gas dryers according to their business needs. These services served to boost our gas sales and cater to the needs of customers. For instance, in regards to commercial natural gas water heating systems, we installed over 300 water heaters for commercial customers ranging from hotels to schools to residential apartments in 2018. Prospects are highly positive and we expect to expand the range of applications even further in the coming year. Providing a more cost-effective solution for our customers, we not only install the relevant equipment or systems, but also provide after-sales services in the areas of purchase, installation, use and maintenance of the equipment.