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Thanks @snowman10, these are the parts I like best:"The supply...

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16/08/19

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Post #: 40015356
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Originally posted by snowman10: ↑

CHINESE INVESTMENT
15 August 2019
(Vol 20, Issue 8)
Topics:
Asia Pacific,Companies,Utilities
Countries:
China (mainland)

You can still unlock 1 article this quarter

Chinese investors look at tech options for rural water focus
China is looking to even out its rural wastewater service gap. With PPP margins thinning, water firms are instead looking to build up their decentralised system supply options.

The government of China announced in July that it would be investing RMB3 billion ($350 million) before the end of this year into improving rural wastewater handling services and environmental quality. 141 counties in central and western regions of the country will be impacted.
The programme aims to mitigate the severe regional disparity in China, where a handful of wealthier regions in the east of the country have more than 50% of rural areas covered by wastewater services, while the figure elsewhere is significantly lower. The investment programme is also expected to leverage local funding support to the tune of around RMB9 billion ($1.3 billion).
In contrast to the construction boom that drove investment in urban municipal wastewater infrastructure, investment in the Chinese rural market since 2015 has been motivated by the country’s Water Pollution Action Plan and 13th Five-Year Plan, which committed to comprehensive wastewater treatment for 130,000 villages and the investing of RMB46.2 billion ($6.6 billion) in agricultural and rural pollution control by 2020.
The three-year rural environment management mandate introduced under these schemes lifted the total wastewater treatment capacity of rural areas to 1,011,900m³/d in 2017, 92% higher than the level in 2015. However, with the majority of projects concentrated in central and eastern China, the country’s average rural wastewater treatment rate reached around 20% in 2017, still far below the 2020 goal of 60%.
RURAL WASTEWATER TREATMENT AND SPENDING IN CHINA
Significant investment over the past decade has seen major progress made on rural wastewater treatment coverage in China, particularly between 2015 and 2017. The majority of development has been focused on areas in the eastern part of the country, a situation which the latest spending plan aims to address.
Source: GWI
There is still huge demand for broader coverage of rural wastewater treatment, but the investment prospects have dwindled. This is largely due to the downturn in appetite from water companies to invest in PPPs in recent years, and a lack of established local discharge standards.
Technology and systems providers are expected to take a stronger hand in the market. This comes after the troubles last year, when Chinese project developers suffered heavily from rising capital costs and narrowing returns on PPP-based integrated environmental management projects. The supply of pre-fabricated, containerised or modular solutions for decentralised wastewater treatment is expected to play a particularly important role.
“We see a growing number of former PPP projects turn into EPC-based contracts, with the risk still greatly relying on local government’s financial ability and credit to have EPC contractors fund the projects themselves in advance of the client’s payment,” said Jiang Yi. Jiang is president of the environmental arm of Chinese central government-owned rail transportation manufacturer CRRC Group Corporation, which has secured eight rural PPP projects since 2017 with a total investment value nearing RMB6 billion ($852 million).
CRRC is now slowing down its investment pace as a project developer in rural areas. “We don’t expect a large expansion in the rural sector, as it takes too much money,” Jiang told GWI. “It would be a good choice if we could simply sell our equipment to the other developers. Integrated wastewater treatment technology suppliers are seeing larger opportunities, with the scale of a single rural project getting smaller.”
CRRC’s decentralised wastewater treatment capabilities derive mainly from its strong in-house expertise supplying vacuum toilet devices for trains. It further enhanced its own technology portfolio by securing international technology suppliers between 2014 and 2017, including Kubota’s Johkasou-type solutions and German sewage treatment specialist Lausitzer Klärtechnik’s sequencing batch reactor systems.
The increasing uptake of equipment-based decentralised approaches is well reflected in the revenue composition of Jiangxi JDL Environmental Protection, another integrated membrane bioreactor specialist actively involved in rural areas. From 2016 to 2018, the proportion of the company’s revenue generated from equipment sales nearly doubled from 41.63% to 77.84%, compared to a sharp decline in the share of comprehensive environmental management project sales (which went down from 42.84% to 11.47%).
Competition among decentralised solution providers has been intense as a result of the lower-tech requirements of rural wastewater, the lack of national-level discharge standards, and the strong requirement for a close relationship with local governments. Listed developers such as Anhui Guozhen, Beijing Capital, Heilongjiang Interchina Water and Shuangliang Eco-Energy Systems have all invested in bringing technology in-house to access the rural markets. Meanwhile, international players such as ASX-listed Fluence Corporation are also accessing the market. In Fluence’s case, its membrane-aerated biofilm reactor technology is set to be adopted in 26 local partnerships in 15 provinces of China.
Beyond the rural sector, river remediation is another field where integrated wastewater treatment systems could be applied. “We are also seeking opportunities in small-scale river remediation where containerised solutions are in great demand.” Jiang said. “In addition, we are planning to diversify into decentralised solid waste management by leveraging our experience in equipment manufacturing. So far, the ratio between our water and waste business is 90:10, but we hope to further increase the waste part to 30% in the future.”
CHINA’S RURAL WASTEWATER GAP
There is a significant amount of disparity in wastewater services in rural China. A few wealthy areas in the east have coverage for more than 50% of their rural areas, but that figure is much lower elsewhere in the country.
Source: Shutterstock

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Thanks @snowman10, these are the parts I like best:

"The supply of pre-fabricated, containerised or modularsolutions for decentralised wastewater treatment is expected to play aparticularly important role."

and

"Meanwhile, international players such as ASX-listed FluenceCorporation are also accessing the market. In Fluence’s case, itsmembrane-aerated biofilm reactor technology is set to be adopted in 26 localpartnerships in 15 provinces of China."

Stirling . .

FLC Price at posting: 41.5¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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