Date
18 October 2017

Waste incineration power sector moves into the fast lane

Helped by clear-cut subsidies, preferential on-grid tariff and tax concession, China’s waste incineration power industry has begun to reap the rewards of their huge upfront expenditure. The policy-driven sector is now gaining further momentum with solid earnings prospects.

The 17 domestic waste-to-energy companies saw their average net profit grow 20 percent year on year in the first nine months of 2013, the China Securities Journal cited a survey by financial information and data provider Wind Information as showing. Even more encouraging, a vast improvement in cash flow suggests that the capital-intensive projects have already passed through their main investment stage, relieving the cost pressure going forward.

As of now, most of the country’s municipal solid waste is sent to landfills. Using garbage for power generation requires much less land — an increasingly valuable resource in cities. And the initiative can fully utilize the residual caloric value of refuses.

Incineration accounts for barely 20 percent of harmless treatment of municipal solid wastes at present. Beijing has set a goal to attain 35 percent incineration level nationwide by 2015. In some mature economies, the ratio even exceeds 80 percent. Thus, there is still ample room for growth in China.

China Everbright International Ltd. (00257.HK), the country’s top player with cutting-edge technology in building waste-to-energy plants, is worth tracking closely as its daily processing capacity for garbage incineration power generation is expected to surge about 40 percent after some projects go into operations next year.

– Contact the writer at hcwong@hkej.com

RC

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