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BRIC stationary gas engine markets – China to lead the pack

Propelled into prominence in the early 2000s, the BRIC acronym refers to Brazil, Russia, India, and China as a single economic concept – of nations at similar phases of their advanced economic development journey. Coined by economist Jim O’Neil, he claimed that GDP (Gross Domestic Product) of these four markets would rise at a faster rate than that of developed economies. To his credit, the share of global GDP (based on purchasing power parity) attributed to BRIC, has risen from 18% to 29% from 2000 to 2013.

But a lot has happened in the past year. While things look promising for India following its unprecedented switch in government, and for China as it diligently abides by its target to keep annual GDP growth above 7% - Russia has been crippled by international sanctions, plummeting oil prices, and weakened currency; Brazil meanwhile, has been swept up in deep structural problems and high-profile corruption scandals.

Economy-wise, 2014 seemed very much an IC year, rather than a BRIC year. Though, the IMF (International Monetary Fund) forecasts economic recovery for Brazil and Russia leading up to 2020.

Did BRIC reciprocating gas engine markets follow a similar fate? To continue reading please follow this link to COSPP: http://www.cospp.com/articles/2015/02/bric-stationary-gas-engine-markets-china-to-lead-the-pack.html
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Emerging drivers set to promote high-efficiency gas-fired generation in China

With a population of 1.4 billion and an economy which, by some measures, is larger than that of the US, almost all global industries are, to some extent, influenced by China. And while China is not normally the first market which comes to mind when the words ‘efficiency’, ‘decentralised’ and ‘energy’ are used in the same breath, there is no doubt that the sheer scale of the technical potential for distributed power investment makes China one market not to ignore. And so, at Delta-ee, we considered China as one of our nine global countries during ‘Year 1’ of our Distributed Power Service (DPS).

The DPS considers the past, current and future market sizes for gas engines used within stationary power applications. By considering market drivers such as energy price trends, the evolving regulatory environment, macro-economic factors, the competitive landscape and end-user segments, we are able to compile detailed insight on which we base our year-on-year projections out to 2020.



Here are three of the key observations from our China research:
  1. Coal mine (and coal bed) methane has taken a significant share of the Chinese gas engine market to date, but will likely have a falling influence in the period to 2020. This is partly due to the demise of the CDM (Clean Development Mechanism) funding stream which previously stimulated investment from overseas, but also due to the emergence of high-efficiency and renewable investments in other sectors. Nevertheless, Coal Mine/Bed Methane projects continue to come online, with both domestic and foreign gas engine manufacturers supplying units - normally in the sub-2 MWe size range.
  2. High-efficiency co- and tri-generation gas-fired projects will become increasingly prevalent. There has already been activity in this sector, with some high-profile projects already appearing. But this is just the tip of the iceberg. With emerging policy support in some regions – and Shanghai leading the way with capital grants and lower gas tariffs for high-efficiency co- and tri-generation developments – together with a continuous and growing need to address air quality issues in densely populated cities, there is strong evidence to suggest that this sector will exhibit growth to 2020.
  3. A shift towards gas-fired power generation will inevitably open up opportunities for large-scale, gas engine-based power plants. While there has been little activity in the ‘power plant’ segment for gas engines in China so far (for ‘power plant’, read multiple 10+ MWe gas engines used primarily for electricity grid export), past performance is unlikely to be a good indicator of the future in this case. The Chinese government has high ambitions to become less reliant on coal-fired power generation, with natural gas set to take an increasing share of the market. While much of this capacity will inevitably be met via large combined cycle gas turbines, towards the end of the decade, we expect multiple gas engine projects will have been announced – especially where flexible, high-efficiency generating capacity is required to meet peak demand. This is indicated via the light-blue bars in the chart above. 

To find out more about the Distributed Power Service, and our China research, please contact John Murray at john.murray@delta-ee.com.
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Toshiba and BDR Thermea fuel cell partnership: does this mark a final nail in the coffin of Europe’s home-grown fuel cell industry?

Toshiba and ‘BDR’ announce a strategic partnership to bring Japanese residential fuel cell technology (‘micro-CHP’) to Europe. 

Other Japanese and EU fuel cell partnerships 

BDR is the third European manufacturer to move away from its own fuel
cell development and gravitate towards Japanese technology. First it was Viessmann with Panasonic, then it was Bosch with Aisin, now it is BDR with Toshiba. 

Panasonic and Viessmann will launch their product in Germany this year. Aisin and Bosch are further behind, but will be taking part in the EU’s ene.field fuel cell demonstration programme and we should see a commercial launch from around 2016. BDR and Toshiba will target commercialisation from 2015 in Germany.  Vaillant continues to work with Germany’s Sunfire (formerly known as Staxera) with a launch expected within the next 2 years.

History repeating itself

The technology battle between Europe and Asia seems to be tipping in Asia’s favour again. Over the last decade, we have seen Asian companies winning the battle for heat pump technology supremacy in many European markets.


Europe had hoped to win the fuel cell micro-CHP battle. With a host of domestic companies developing diverse product in Europe, its prospects looked promising. 


But Japan is way out ahead in the race to volumes.
 Selected European fuel cell developers                     
  • Baxi Innotech 
  • Ceres Power
  • CFCL
  • Dantherm Power   
  • Elcore
  • Hexis
  • Inhouse Engineering 
  • IRD Fuel Cell
  • SOFCPower,
  • Staxera
  • St. Gobain
  • Topsoe Fuel Cell

Japan’s success was not down to luck


Japan’s emergence as fuel cell micro-CHP global leader was not a fluke. It has been achieved through its Government’s backing of its home-grown fuel cell industry to the tune of almost half a billion euros in public capital spending and support through comprehensive R&D and market introduction programmes. This is not to mention the benefit Japanese companies have received from stable long term policy plan and attractive subsidies. 

However, Japan still faces the challenge of achieving its long term cost reduction targets for PEMFC technology. The technical challenge of SOFC technology has also meant that product availability remains limited in Japan but is still attracting significant investment. 

So does this mean a final nail in the coffin for Europe’s home-grown fuel cell industry?

Not necessarily. While many of the European fuel cell developers lack the resources and brand power of the large boiler manufacturer / Japanese partnerships - the smaller, more agile companies could have a crucial edge when it comes to hunger and desire to see fuel cells succeed in the heating market. And with a diverse range of products, technologies, business models, they could find the key to unlocking Europe’s fuel cell micro-CHP market potential.

 Press Release
  • BDR Thermea press release here.
  • Toshiba press release here.
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Chinese Manufacturers of Hot Water Heat Pumps – Rising Stars

This is the third article in a series of five that shines light on some highlights from our study on domestic hot water heat pumps (DHW HPs), recently published as part of our Heat Pump Research Service. For more information on the study or the Service please contact me or my colleague Lindsay Sugden.

Chinese Products – Good Value for Money?

When talking to contacts in the industry about Chinese heat pump manufacturers, two observations are commonplace: Chinese products are cheaper than European ones, but also of lesser quality than the average European product. But are they really of lesser quality? When looking at domestic hot water heat pumps I would certainly disagree.

During our research we have come across a multitude of DHW HP systems of Chinese origin – some of these show that they can at least equal European products in terms of quality.

Take Midea’s 200L & 300L units for example: The Chinese appliance manufacturer’s systems are currently not sold under its own brand in Europe, but their products are packaged by some of the European industry’s biggest names - Bosch Thermotechnik is selling them in the US, Nibe via its subsidiary KNV in Austria and Danfoss under its own brand in France. In France the systems are sold by at least four other companies. We even consider Altech, a house brand of Saint-Gobain Building Distribution, to be amongst the top five in the French DHW HP market. The fact that major European brands are confident enough to be selling the Midea product is a clear indication that the quality must be sufficient.

In Switzerland – a market known for its emphasis on quality products – the Chinese system sold by the distributor and packager Kibernetik has been awarded the Swiss Heat Pump Federation’s Quality Seal. According to the company there is also no remarkable difference in the number of breakdowns between the systems of Chinese and European manufacture.

Then consider the Polish DHW HP market – one of the fastest growing in Europe, and already dominated by Chinese products.  The Polish market leader, Hewalex, is selling a Chinese system. The performances – at least anecdotally – are good enough to give end-users running cost savings against solid fuel systems.

Yet the performance evidence is not only anecdotal. Based on European test standards the Chinese products compete very well with European ones. The 300L Midea system reaches COPs of 2.98 (EN 16147, tap cycle L) and 3.6 (EN 255-3). Kibernetik’s system reaches efficiencies of 2.9 (EN 16147, tap cycle XL) and 3.3 (EN 255-3) – certified by the HP test centre Buchs - WPZ. This places both units well amongst the more efficient half of systems currently on the European market.

Chinese Competition – Threat or Opportunity?

All the above shows that Chinese DHW HPs are not only competitive on prices (they have contributed to a considerable decrease in DHW HP prices in France over the last few years) but that they also compete with the average European manufactured DHW HP on efficiency.

But what does this mean for the European manufacturers?

Over the short term this development is not something to worry the day-to-day business. Continuing growth of the sector will allow most players in the market to further increase their sales. Low price but good quality OEM systems of Chinese origin will also allow European manufacturers who do not have their own systems to gain traction in the market until they have developed their own technology.

In the long run I think this will change significantly. With the Chinese Government having identified heat pumps and air conditioning systems as a key area for industry growth, the country’s manufacturers will certainly not play the role of OEMs forever. Once they start setting up their own distribution networks in Europe the threat to the European manufacturers is going to be of an entirely different order of magnitude than it is now. European manufacturers have to be aware of this and prepare their strategies.

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Guest — James
Really your articles are too good to read.In fact I have gained too much knowledge on domestic hot water heat pumps(DHW HPs)...Kee... Read More
Monday, 25 August 2014 13:53
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