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Power Plants with Environmental Protection Devices will Benefit from the Denitration Electricity Tariff.

Denitration Market will Take Off Under Policy Incentives

Hong Kong, Dec 5, 2011 - (ACN Newswire) - On Nov. 30th, as per China National Development and Reform Commission online information, the government will offer a subsidy of RMB 0.8/kw to coal fired power plants equipped with denitration devices that are under operation, to make up for the costof denitration and incentivize the installation of denitration devices in coal fired power plants.

Government Policy Incentives

NOx is a major hazardous air pollutant. According to the emission reduction target set forth in the 12th Five YearPlan, the total NOx emission should be kept within 13.5 million tons by 2015, a reduction of 10% compared with 2010. At present, over half of the NOx in China comes from coal fired power plants which emits NO and turns into NO2 after chemical reaction with O2 in the air.

In Sep. this year, the Ministry of Environmental Protection released a new Air Pollutant Emission Standard for Coal Fired Power Plants, which put forward a NOx emission standard more stringent than ever. The 100mg/m3 emissionstandard is more restrictive than the Europe and US standards, which demonstrated the Chinese government's resolution in reducing the pollutant emission from coal fired power plants.

It is estimated that with the implementation of the new Standards, the installed capacity of flue gas denitration (FGD) devices will reach more than 900GW by 2015, requiring hundreds of billions of investment and huge operating costs. As per the 12th Five Year Plan, during the Plan period, all of the coal firedpower generation units with installed capacity of over 300MW will be equipped with denitration devices. Wang Zhixuan, secretary general of China Electricity Council indicated that the cost of coal fired power plants retrofit ranges from RMB 200 Bn to RMB 250 Bn with annual operation cost of RMB 110 Bn.

Currently, due to rising cost of thermal coal, coal fired power plants are suffering from extensive losses and difficulties in business operation, and thus cannot afford the huge cost incurredfrom the rising environmental protection standards. To encourage coal fired power plants to use denitration devises, the government decided to offer a subsidy of RMB 0.8/kw to coal fired power plants equipped with denitration devices that are underoperation, to make up for the cost of denitration.

Zhang Lijun, Deputy Minister of Environmental Protection said that the RMB 0.15/kwh tariff subsidy to desulphurization power generation units had encouraged the installation of desulphurization devices in coal fired power plants in the 11th Plan Year Plan period. The 12th Five Year Plan has adopted similar approach toward denitration to give preferential treatment to coal fired power generation units equipped with desulphurization and denitration devices.

Wang Zhixuan stressed that apart from subsidy to the denitration electricity tariff, the government should also set up special capital accounts to fund the denitration retrofit of existing power plants. He suggested that other financial support such as tax credit should be given to denitration projects and operation of denitration devices. Besides, more investment should be made to the R&D of denitration technologies, such as catalyst (titanium dioxide) production, waste catalyst treatment and the research, development and application of key instruments.

On Nov. 22nd, the Ministry of Environmental Protection released the list of power plants whose denitration devises failed to work well and the respective penalties. Among that, 8 coal fired power plants were punished due to noncompliance with SO2 standard. The Ministry of Environmental Protection ordered the 8 companies to formulate FGD retrofit plans within a month and complete the retrofit by the end of the year.

Li Keqiang's remarks at the 6th Sino-Japan Energy Saving and Environmental Protection Forum also demonstrated the government's resolution to reduce NOx emission. He said that energy saving and environmental protection are key aspects of economic transformation and potential growth points. Energy saving and environmental protection can create market demand and promote growth for the economy, enhance technologies and efficiency of enterprises, and improve the environment and livelihood of people. Energy saving and environmental protection is very important driving forces for China's economic development at current stage, and the only way to break through the resource bottleneck and realize sustainable development.

Well-prepared Companies will Benefit

Li Keqiang pointed out that the energy saving and environmental protection in China is presenting extensive market and business opportunities. During the 12th Five Year Plan period, we will take numerous measures such as structural adjustment, engineering technologies and management innovation to promote energy saving and pollution reduction, enhance energy efficiency, improve environment, accelerate economic growth and sustain long term rapid growth.

Challenges come with opportunities. Companies should take active measures to grab the opportunities presented by the booming denitration market. Wang Zhixuan said that relevant energy saving and environmental protection companies should make plans and prepare themselves with the technologies and talents.

Right now, coal fired power plants mainly use three denitration methods: low-nitrogen combustion denitration, SCR denitration and SNCR denitration. Low-nitrogen combustion denitration, or upfront denitration,controls the emission of NOx during the combustion; SCR and SNCR, or backend denitration, eliminate the NOx in the emissions from the boiler combustion. Experts believe that low-nitrogen combustion and SCR will become the most popular denitration methods going forward. The denitration market of coal fired power plants is estimated at RMB 130 Bn during the 12th Five Year Plan period, with SCR denitration market of RMB 90 Bn and low-nitrogen combustion of RMB 40 Bn.

Denitration goes beyond coal fired power plants. After the emission standards for coal fired power plants have been revised, the denitration retrofit for iron &steel, nonferrous metal, chemicals, building materials and other sectors will also be put on agenda, which will further enlarge the denitratio market.

Some expert said during an interview that the annual demand for denitration catalyst in China was around 100,000 m3 taking into consideration the retrofit of existing coal fired power plants and cement plants based on the 12th Five Year Plan. However, the annual production capacity for catalyst was less than 50,000 in China.

The "2010 Information of FGD of Coal Fired Power Plants" released by China Electricity Council indicated that the desulphurization ofcoal fired power plants has developed steadily during the 11th Five Year Plan period with stable market concentration. Since desulphurization and denitration face similar clients, some expert believes that denitration market will present similar features with desulphurization market but will have a higher starting point due to the experience accumulated from desulphurization. The expert said that leaders in desulphurization market with denitration technologies are likely to obtain more denitration orders during the 12th Five Year Plan period and thus will secure a larger market share than other companies.

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Publication:ACN Newswire
Geographic Code:9CHIN
Date:Dec 5, 2011
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