16 Sep 2009 08:16

China's building energy conservation market to take off in two or three years - consultant

By Terry Wang

Shanghai. September 16. INTERFAX-CHINA - As interest in conserving energy becomes more prevalent in China, the building energy conservation sector may experience unbridled growth in two or three years' time, an expert in building technologies told Interfax.

"The market is very promising and extremely large," Charlie Jiang, consulting director of industrial automation and electronics and building technologies of Frost & Sullivan China, said. "It would be hard to accurately put a number on it at the moment."

Energy consumption in buildings accounts for between 30 percent and 40 percent of China's total energy consumption, Jiang said, providing great potential for the country to lower its energy consumption, Jiang said.

As of the end of 2004, China had about 40 billion square meters of buildings, about 99 percent of which lacked any kind of energy conservation technology, according to Sandy Wu, research manager of environment and building technologies of Frost & Sullivan China. Furthermore, between 1.6 billion and 2 billion square meters of new buildings are planned to be built annually between now and 2020, yet only 5 percent of the new buildings are being built with energy conservation technology.

"Although the awareness of citizens and companies of energy conservation has been growing, little has been done to develop the building energy conservation sector as of yet," Jiang said. "Green buildings cost more, and investment in energy conservation technology will not provide returns until further down the track."

The real estate market has the most potential for developing the building energy conservation sector, but the market is so hot that real estate developers do not have much incentive to install energy conservation technology in their buildings, Jiang said.

As such, Jiang believes that a top-down approach is necessary to spur green building construction, so the government should set development targets for local government and companies. "It would be more productive for the government to discuss green building development with real estate developers rather than technology and equipment suppliers," Jiang said.

Jiang said that Chinese government has shown an interest in building energy conservation technology during the preparation of the Olympic Games and the World Expo, incorporating the most advanced energy conservation technology into many of the new buildings constructed for the events.

Over the past few years, China created several laws and regulations to promote energy conservation, such as the Energy Conservation Law and the Green Building Evaluation Standard, Wu said.

China's central government has also pledged to invest RMB 1.5 trillion ($219.62 million) in the building energy conservation sector between 2007 and 2020. Wu said that investment would spur additional investment from local governments and domestic companies. However, Wu and Jiang both believe that the government needs to do more to encourage the development of green buildings and create more detailed regulations to guide the industry.

Although China's building energy conservation market remains nascent, foreign companies have already gotten a foothold in the market. Jiang said that Honeywell International Inc., Siemens AG and Johnson Controls Inc. have already started supplying building energy conservation equipment and technology to China to secure their position in the market once it matures.

Jiang suggested that these foreign companies should learn more about the market to provide the right products and services, and should remain active in the market even though there is not much money to made right now.

He added that domestic building energy conservation equipment suppliers should act quickly to improve their technology in order to secure their own place in the market. He believes that domestic suppliers will probably get support from the government as the country is keen on pushing domestic companies to develop at a faster pace.

Wu believes that domestic building energy conservation companies should emulate their foreign counterparts, which have changed their marketing strategy from only supplying equipment to providing an entire solution for managing energy consumption.