During the national "13th Five-Year Plan" period, energy structure optimisation and environmental pollution controls have become the most prominent drivers for natural gas consumption. It is expected that the proportion of natural gas in primary energy will increase to 10% from 6%. At the same time, the country's recovery in industrial growth and its implementation of the strategy for efficient use of clean energy have brought new opportunities and challenges to the industrial and commercial gas market.
Leveraging the benefits of new policies and market environment, we have captured many new business opportunities, consolidating our existing markets and embracing fresh challenges with the use of the most advanced technologies and innovative applications. We also keep expanding our markets and strengthening our project development whilst driving our ventures into new fields of energy. These moves are expected to invigorate and ensure the sustainable development of our industrial and commercial gas markets.
To expedite the use of natural gas in the industrial sector, the NDRC, together with 13 other departments, jointly promoted and endorsed the "Opinions on Accelerating the Utilisation of Natural Gas", which explicitly demands accelerated developments of natural gas distributed energy through promoting signature projects of natural gas distributed energy at places that have the needs for combined cooling, heating and power system, including energy load centres, industrial and logistics parks, tourist attractions, business centres, transportation hubs, hospitals and schools in large and medium-sized cities.
In 2017, we put into operation several distributed energy projects, such as Snow Brewery in Xindu District in Chengdu City, Sichuan Province, and the Luoshanhu Resort in Guilin City, with the total gas consumption reaching nearly 100 million cubic metres. TCEI confirmed a number of projects, including heat and power cogeneration as well as regional heating and heat supply in industrial areas. The total natural gas consumption is expected to reach 3.5 billion cubic metres by 2022. SCEI Distributed Energy Systems Co., Ltd. also signed eight investment agreements during the year.
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. During the year, coal-to-gas boiler conversion projects contributed approximately 800 million cubic metres of gas consumption, which is 1.6 times higher than that of the previous year.
Furnace Conversion from Coal to Natural Gas
We are dedicated to research and innovation in industrial technology, seeking to develop new natural gas application technologies for different industrial production sectors. During the year, we introduced and upgraded energy-efficient technology to effectively promote the conversion of coal-fired furnaces to natural gas and reduce the gas consumption costs of our customers. In 2017, the more than 80 new furnace customers contributed to the sales of approximately 70 million cubic metres of gas.
Small and Medium-sized Food Outlets
To encourage small and medium-sized food outlets to use piped natural gas, we actively seek the support of local government authorities and make every effort to implement and publicise environmental and safety-related measures. By replacing bottled liquefied gas with piped natural gas, customers can enjoy the benefits of lower fuel costs and enhanced gas safety.
Natural Gas Water Heating System
Seizing opportunities in the market, the Group continues to expand its natural gas business in new industrial and commercial applications. We successfully developed and promoted a natural gas water heating system for commercial use. Given its features of low cost, space-saving, flexible installation and easy control, the product has brought in many new customers, including small to medium-sized hotels, schools and fitness centres in eastern China.