LED lighting products have always been highly praised by experts and governments for their strong energy-saving effects. However, its high prices have deterred many users. In the 90s of last century, China began to introduce a new mechanism for energy conservation in developed countries -- the contract energy management model (EMC). This model has brought bright prospects for the promotion of LED lighting. However, after a period of trials, some experts have recently revealed that the promotion of contract energy management mode in China is not as smooth as imagined, and energy conservation service companies are faced with a series of difficulties such as financing difficulties, integrity mechanisms, and lack of financial and taxation support. LED promotion hopes It is still difficult to manage contract energy.
Contract energy management success rate is less than 10%
Zhang Dongsheng, vice president of the Guangzhou Lighting Association, told reporters that the essence of Energy Management Contracting (EMC) is to use the reduced energy costs to pay for energy-saving investment in the full cost of energy-saving projects. This model originated in the 1970s, and it can reduce the current operating costs. Users use future benefits to upgrade plants and equipment and improve energy efficiency.
It is understood that the contract energy management cooperation model is usually divided into two types: First, the annual savings in electricity costs, divided by the proportion of the energy-saving transformation of the two parties, return year after year, until the completion of the contract stipulated amount, the contract implementation cycle longer; second is the annual The saved electricity fee is returned to the LED company in full, up to the agreed amount of the contract. This model has a fast payback and is favored by LED companies.
"If you really follow the contract energy management model, the company providing LED services is also profitable. But the facts are not as smooth as you think." Zhang Dongsheng revealed to reporters that the current provincial contract energy management success rate is only 5% - 10%. Among them, private enterprises are better promoted, and state-owned enterprises are relatively difficult.
Due to its high price, LED lighting products have encountered bottlenecks in the process of widespread promotion. According to Zhang Dongsheng, a 1.2-meter-long light pipe requires 278 chips. If the price of a chip is calculated on the basis of the price quoted by the chip maker Cree, a lamp requires nearly 300 yuan. The ordinary energy-saving lamps only need tens of dollars.
Zhang Dongsheng said in an interview with reporters that although China's LED product manufacturing capacity accounts for 50% of the world, but the profit is the lowest link. The core technology for the production of LED products is in foreign countries, which is the main factor that affects the price of products. Second, there are factors such as high production costs and lack of national standards.
According to statistics, currently there are more than 2,400 enterprises engaged in LED in China. Unfortunately, application products and supporting enterprises accounted for the vast majority, with over 1,700; followed by packaging companies, about 600; the least are companies engaged in epitaxial growth, chip manufacturing, research institutions and manufacturing enterprises. In total there are only 40.
Some companies have lost the incentive to retrofit LED applications because of the high LED cost. For this reason, contract energy management came into being, but its promotion is not optimistic.
The lack of integrity of the company led to the lawsuit constantly "in fact, contract energy management is a cooperation method that both parties can profit. But because some companies lack credibility, they often cause disputes, and even a lawsuit goes to the court. This hinders the contract to some extent The promotion of energy management." Zhou Ming, general manager of Shenzhen Qiming Contract Energy Management Co., Ltd. disclosed in an interview.
He pointed out that because energy-saving service companies have taken most of the risks, they need to take into account a range of factors such as capital occupation and personnel costs when making profits. However, some companies deliberately delay payment or even fail to pay for energy-saving sharing on various grounds. Profits have hit the enthusiasm of energy-saving service companies.
Due to the lack of an independent third party to evaluate the project energy savings, users and energy conservation service companies have different opinions on energy efficiency, coupled with the lack of energy service standards and other factors that restrict the promotion of contract energy management. He cited an example, some companies carried out LED conversion, but because of the lack of specific energy detection standards, making it and fan, air conditioning and other electrical power consumption is difficult to accurately measure, so that when the cost of payment is easy to produce wrangling Happening.
He also mentioned that some corporate customers, after carrying out contractual energy management cooperation, freely modify the lines and build other electric projects, resulting in insignificant energy savings, and the return on investment of energy-saving companies is far-off.
Zhou Ming believes that in order to eliminate this situation, companies need to improve their credibility. The government should also supervise it in real time and formulate relevant mandatory regulations. Promote awareness of energy conservation, protect the interests of both parties, and promote the use and promotion of LED.
Municipal engineering and state-owned enterprises did not promote enthusiasm "For comparison, contract energy management is easier to promote in private enterprises, but it is more difficult in municipal projects and state-owned enterprises." Zhou Ming stated that some state-owned enterprises did not promote LED due to financial problems. Enthusiasm.
According to the reporter's understanding, since the 2009 Ministry of Science and Technology of China announced plans for 10 cities and 10,000 LED lights, it has quickly received positive responses from all parts of the country and quickly evolved into a craze for hundreds of thousands of LED lights in 21 cities. Although the government vigorously promotes the transformation of the LED lighting market, the situation is not optimistic.
Zhou Ming believes that one of the main reasons for influencing LED promotion is that China's fiscal and taxation facilities are not perfect. When the energy-saving company signs an agreement with the relevant owner, the finance of each department can only pay for the expenditure already used. This way, the energy-saving company may face difficulties in obtaining payment. This not only affects the enthusiasm of the government departments, but also affects the enthusiasm of energy-saving companies to promote contract energy management.
In addition, the same situation has occurred in state-owned enterprises. Compared to the self-financing of the private sector, the state-owned enterprises appear to be underpowered to save electricity. Some energy-saving companies have disclosed to reporters that in recent years, often because of financial issues, contract energy management promotes abortion.
Zhou Ming pointed out that the imperfect matching of taxation also affected the promotion of contract energy management. He said, “Taxation is based on the total amount of the contract, but in reality, the income of energy-saving companies is paid by installments, so this brings great financial pressure to energy-saving companies.†Due to contract energy management The long cycle and the mobilization of personnel of government agencies during the period also brought about variables to the implementation of the contract.
A survey of LED company financing difficulties found that many LED companies face financing difficulties. Most energy-saving service companies are not economically strong and cannot guarantee the security and security of their loans. Coupled with a long period of energy management contract, it usually takes three to five years for one investment, and some even take longer to get a return. Energy-saving companies are faced with greater capital turnover pressure in subsequent investment.
Zhou Ming told reporters that energy-saving companies mainly through four channels of financing, including cooperation between companies, forms of leasing, bank support and energy-saving investment company support. He said that the cooperation and leasing behavior between companies is not a permanent solution and it is difficult to grasp the key links such as product quality. Bank loans are the most effective way. However, due to some objective reasons, bank loans have been struggling.
Some industry players began to call for the development of financial products that are suitable for the characteristics of LED lighting projects.
“Shenzhen, as the most concentrated area in the LED industry, has set up a federation of industry with the aim of playing the role of a bridge between the government and enterprises.†Zhou Ming said in an interview with reporters that there is also a financing model that consists of more than four voluntary companies. A consortium, the members of the consortium negotiate the amount of the loan, jointly apply for a loan from the bank, and jointly provide guarantees for the loan. Each member is responsible for the joint loan and joint guarantee mode with joint guarantee responsibility for the group loan.
He believes that LED lighting projects do not have high internal rate of return and unique technologies. Financing on a single project is difficult to obtain from venture capital institutions. Therefore, bank loans have become the main route for financing energy-saving service companies engaged in LED lighting projects. However, many energy-saving service companies have their own fixed assets. Products and equipment have to be handed over to users after the EMC contract ends. This makes it difficult to submit financing applications to banks through asset mortgages.
Zhou Ming explained to the reporter that many of the existing financial products are not funded under the contract personnel management project, but in the form of small and medium-sized enterprises. Most of the loans are short-term and long-term. To avoid risks, the bank requires that the project investment recovery period be less than 5 years when it is used for contract energy management projects. The general contract energy management project has a recovery cycle of more than 6 years, which has created a huge impediment to the loan of energy-saving service companies.
â– Problems The chaos of the energy-saving service market Some successful projects The internal rate of return is low According to statistics, at present, there are more than 100 energy-saving service companies in the country. Experts with research contract energy management pointed out that at present, energy-saving service companies engaged in LED lighting projects are mainly divided into two categories: one is derived from LED lighting product manufacturing companies; the other is in the original energy-saving service content Added LED lighting section. However, the energy-saving service industry market is not standardized and the lack of evaluation standards cannot be ignored.
A person in charge of the Guangdong Provincial Lighting Association stated that energy service companies are still in the early stages of development in China, and there are no mature industry standards, such as service standards, energy conservation testing and certification methods, contract specifications, and compliance guidelines. At the same time, there is also a lack of criteria for evaluating the service quality of energy-saving service companies. The market for energy-saving services is relatively chaotic.
He also revealed that in the LED lighting projects with successful contract energy model, the internal rate of return of the project may not even reach 17%, and this rate of return is also 5 years or more before the contract energy management contract period can be achieve. In order to get the project, some companies advertise the contract period can be signed for 3 years or even shorter. The malicious competition in the form of lower prices and the compression of EMC execution cycles has caused project users to believe that LED lighting projects are highly rewarding and even profitable, thus further depressing the profitability and even the living space of energy-saving service companies.
It is understood that most of the energy-saving service companies that currently carry out LED lighting projects in China are SMEs, which are in a weak position in the market. In addition, these energy-saving companies also face challenges such as the challenges of new technologies and new products, lower energy efficiency, and owners’ breach of contract.
The responsible person pointed out that the establishment of a professional, independent energy-saving service company engaged in LED lighting is imminent. Professional companies combine LED lighting and EMC organically to promote sound development in the industry.
â– Observe that the LED industry scale will reach 120 billion yuan next year to promote or need more ways. On June 24, 2010, Guangdong Province issued the “Guangdong Province LED Industry Development Plan (2010-2015) Consultation Draftâ€. The plan points out that In 2012, the scale of the LED industry reached 120 billion yuan, becoming an industry group with an annual output value of more than 100 billion yuan, and cultivating more than 20 companies with output value exceeding 1 billion yuan. By 2015, the scale of the LED industry will exceed 300 billion yuan. It will basically establish an innovation system that combines enterprise-oriented, market-oriented, and production-study-research integration, and will establish a global LED packaging center and the largest product production and application base. Within 3 years, LED lighting was basically realized in road lighting, main public places and institutions in Guangdong Province.
It is understood that China's first large-scale contract energy management alliance initiated by Guangdong Green Industry Investment Fund has already settled in Shenzhen. It is understood that the alliance brings together many upstream and downstream companies in the LED industry chain, financial institutions, testing organizations, engineering design and construction companies, tendering companies, law firms, and energy contract management service companies.
Some experts said that Shenzhen can do more to promote LED. At present, LED indoor lighting technology is more mature than outdoor lighting. If Shenzhen can promote LED transformation in public buildings such as the Civic Center, it can create nearly 3,000 upstream and downstream companies in the local area. More market opportunities.
Experts pointed out that the success rate of contract energy management in our province is less than 10%, and the promotion of contract energy management is a long way to go. We should standardize the energy service market, strengthen the promotion of contract energy management, set up specialized energy conservation project guarantee funds and corresponding operating agencies, and establish and improve the energy-saving financing intermediary mechanism for guaranteeing funds to start bank loans. A set of government, industry associations, and LED business cooperation platforms have yet to be established.
Contract energy management success rate is less than 10%
Zhang Dongsheng, vice president of the Guangzhou Lighting Association, told reporters that the essence of Energy Management Contracting (EMC) is to use the reduced energy costs to pay for energy-saving investment in the full cost of energy-saving projects. This model originated in the 1970s, and it can reduce the current operating costs. Users use future benefits to upgrade plants and equipment and improve energy efficiency.
It is understood that the contract energy management cooperation model is usually divided into two types: First, the annual savings in electricity costs, divided by the proportion of the energy-saving transformation of the two parties, return year after year, until the completion of the contract stipulated amount, the contract implementation cycle longer; second is the annual The saved electricity fee is returned to the LED company in full, up to the agreed amount of the contract. This model has a fast payback and is favored by LED companies.
"If you really follow the contract energy management model, the company providing LED services is also profitable. But the facts are not as smooth as you think." Zhang Dongsheng revealed to reporters that the current provincial contract energy management success rate is only 5% - 10%. Among them, private enterprises are better promoted, and state-owned enterprises are relatively difficult.
Due to its high price, LED lighting products have encountered bottlenecks in the process of widespread promotion. According to Zhang Dongsheng, a 1.2-meter-long light pipe requires 278 chips. If the price of a chip is calculated on the basis of the price quoted by the chip maker Cree, a lamp requires nearly 300 yuan. The ordinary energy-saving lamps only need tens of dollars.
Zhang Dongsheng said in an interview with reporters that although China's LED product manufacturing capacity accounts for 50% of the world, but the profit is the lowest link. The core technology for the production of LED products is in foreign countries, which is the main factor that affects the price of products. Second, there are factors such as high production costs and lack of national standards.
According to statistics, currently there are more than 2,400 enterprises engaged in LED in China. Unfortunately, application products and supporting enterprises accounted for the vast majority, with over 1,700; followed by packaging companies, about 600; the least are companies engaged in epitaxial growth, chip manufacturing, research institutions and manufacturing enterprises. In total there are only 40.
Some companies have lost the incentive to retrofit LED applications because of the high LED cost. For this reason, contract energy management came into being, but its promotion is not optimistic.
The lack of integrity of the company led to the lawsuit constantly "in fact, contract energy management is a cooperation method that both parties can profit. But because some companies lack credibility, they often cause disputes, and even a lawsuit goes to the court. This hinders the contract to some extent The promotion of energy management." Zhou Ming, general manager of Shenzhen Qiming Contract Energy Management Co., Ltd. disclosed in an interview.
He pointed out that because energy-saving service companies have taken most of the risks, they need to take into account a range of factors such as capital occupation and personnel costs when making profits. However, some companies deliberately delay payment or even fail to pay for energy-saving sharing on various grounds. Profits have hit the enthusiasm of energy-saving service companies.
Due to the lack of an independent third party to evaluate the project energy savings, users and energy conservation service companies have different opinions on energy efficiency, coupled with the lack of energy service standards and other factors that restrict the promotion of contract energy management. He cited an example, some companies carried out LED conversion, but because of the lack of specific energy detection standards, making it and fan, air conditioning and other electrical power consumption is difficult to accurately measure, so that when the cost of payment is easy to produce wrangling Happening.
He also mentioned that some corporate customers, after carrying out contractual energy management cooperation, freely modify the lines and build other electric projects, resulting in insignificant energy savings, and the return on investment of energy-saving companies is far-off.
Zhou Ming believes that in order to eliminate this situation, companies need to improve their credibility. The government should also supervise it in real time and formulate relevant mandatory regulations. Promote awareness of energy conservation, protect the interests of both parties, and promote the use and promotion of LED.
Municipal engineering and state-owned enterprises did not promote enthusiasm "For comparison, contract energy management is easier to promote in private enterprises, but it is more difficult in municipal projects and state-owned enterprises." Zhou Ming stated that some state-owned enterprises did not promote LED due to financial problems. Enthusiasm.
According to the reporter's understanding, since the 2009 Ministry of Science and Technology of China announced plans for 10 cities and 10,000 LED lights, it has quickly received positive responses from all parts of the country and quickly evolved into a craze for hundreds of thousands of LED lights in 21 cities. Although the government vigorously promotes the transformation of the LED lighting market, the situation is not optimistic.
Zhou Ming believes that one of the main reasons for influencing LED promotion is that China's fiscal and taxation facilities are not perfect. When the energy-saving company signs an agreement with the relevant owner, the finance of each department can only pay for the expenditure already used. This way, the energy-saving company may face difficulties in obtaining payment. This not only affects the enthusiasm of the government departments, but also affects the enthusiasm of energy-saving companies to promote contract energy management.
In addition, the same situation has occurred in state-owned enterprises. Compared to the self-financing of the private sector, the state-owned enterprises appear to be underpowered to save electricity. Some energy-saving companies have disclosed to reporters that in recent years, often because of financial issues, contract energy management promotes abortion.
Zhou Ming pointed out that the imperfect matching of taxation also affected the promotion of contract energy management. He said, “Taxation is based on the total amount of the contract, but in reality, the income of energy-saving companies is paid by installments, so this brings great financial pressure to energy-saving companies.†Due to contract energy management The long cycle and the mobilization of personnel of government agencies during the period also brought about variables to the implementation of the contract.
A survey of LED company financing difficulties found that many LED companies face financing difficulties. Most energy-saving service companies are not economically strong and cannot guarantee the security and security of their loans. Coupled with a long period of energy management contract, it usually takes three to five years for one investment, and some even take longer to get a return. Energy-saving companies are faced with greater capital turnover pressure in subsequent investment.
Zhou Ming told reporters that energy-saving companies mainly through four channels of financing, including cooperation between companies, forms of leasing, bank support and energy-saving investment company support. He said that the cooperation and leasing behavior between companies is not a permanent solution and it is difficult to grasp the key links such as product quality. Bank loans are the most effective way. However, due to some objective reasons, bank loans have been struggling.
Some industry players began to call for the development of financial products that are suitable for the characteristics of LED lighting projects.
“Shenzhen, as the most concentrated area in the LED industry, has set up a federation of industry with the aim of playing the role of a bridge between the government and enterprises.†Zhou Ming said in an interview with reporters that there is also a financing model that consists of more than four voluntary companies. A consortium, the members of the consortium negotiate the amount of the loan, jointly apply for a loan from the bank, and jointly provide guarantees for the loan. Each member is responsible for the joint loan and joint guarantee mode with joint guarantee responsibility for the group loan.
He believes that LED lighting projects do not have high internal rate of return and unique technologies. Financing on a single project is difficult to obtain from venture capital institutions. Therefore, bank loans have become the main route for financing energy-saving service companies engaged in LED lighting projects. However, many energy-saving service companies have their own fixed assets. Products and equipment have to be handed over to users after the EMC contract ends. This makes it difficult to submit financing applications to banks through asset mortgages.
Zhou Ming explained to the reporter that many of the existing financial products are not funded under the contract personnel management project, but in the form of small and medium-sized enterprises. Most of the loans are short-term and long-term. To avoid risks, the bank requires that the project investment recovery period be less than 5 years when it is used for contract energy management projects. The general contract energy management project has a recovery cycle of more than 6 years, which has created a huge impediment to the loan of energy-saving service companies.
â– Problems The chaos of the energy-saving service market Some successful projects The internal rate of return is low According to statistics, at present, there are more than 100 energy-saving service companies in the country. Experts with research contract energy management pointed out that at present, energy-saving service companies engaged in LED lighting projects are mainly divided into two categories: one is derived from LED lighting product manufacturing companies; the other is in the original energy-saving service content Added LED lighting section. However, the energy-saving service industry market is not standardized and the lack of evaluation standards cannot be ignored.
A person in charge of the Guangdong Provincial Lighting Association stated that energy service companies are still in the early stages of development in China, and there are no mature industry standards, such as service standards, energy conservation testing and certification methods, contract specifications, and compliance guidelines. At the same time, there is also a lack of criteria for evaluating the service quality of energy-saving service companies. The market for energy-saving services is relatively chaotic.
He also revealed that in the LED lighting projects with successful contract energy model, the internal rate of return of the project may not even reach 17%, and this rate of return is also 5 years or more before the contract energy management contract period can be achieve. In order to get the project, some companies advertise the contract period can be signed for 3 years or even shorter. The malicious competition in the form of lower prices and the compression of EMC execution cycles has caused project users to believe that LED lighting projects are highly rewarding and even profitable, thus further depressing the profitability and even the living space of energy-saving service companies.
It is understood that most of the energy-saving service companies that currently carry out LED lighting projects in China are SMEs, which are in a weak position in the market. In addition, these energy-saving companies also face challenges such as the challenges of new technologies and new products, lower energy efficiency, and owners’ breach of contract.
The responsible person pointed out that the establishment of a professional, independent energy-saving service company engaged in LED lighting is imminent. Professional companies combine LED lighting and EMC organically to promote sound development in the industry.
â– Observe that the LED industry scale will reach 120 billion yuan next year to promote or need more ways. On June 24, 2010, Guangdong Province issued the “Guangdong Province LED Industry Development Plan (2010-2015) Consultation Draftâ€. The plan points out that In 2012, the scale of the LED industry reached 120 billion yuan, becoming an industry group with an annual output value of more than 100 billion yuan, and cultivating more than 20 companies with output value exceeding 1 billion yuan. By 2015, the scale of the LED industry will exceed 300 billion yuan. It will basically establish an innovation system that combines enterprise-oriented, market-oriented, and production-study-research integration, and will establish a global LED packaging center and the largest product production and application base. Within 3 years, LED lighting was basically realized in road lighting, main public places and institutions in Guangdong Province.
It is understood that China's first large-scale contract energy management alliance initiated by Guangdong Green Industry Investment Fund has already settled in Shenzhen. It is understood that the alliance brings together many upstream and downstream companies in the LED industry chain, financial institutions, testing organizations, engineering design and construction companies, tendering companies, law firms, and energy contract management service companies.
Some experts said that Shenzhen can do more to promote LED. At present, LED indoor lighting technology is more mature than outdoor lighting. If Shenzhen can promote LED transformation in public buildings such as the Civic Center, it can create nearly 3,000 upstream and downstream companies in the local area. More market opportunities.
Experts pointed out that the success rate of contract energy management in our province is less than 10%, and the promotion of contract energy management is a long way to go. We should standardize the energy service market, strengthen the promotion of contract energy management, set up specialized energy conservation project guarantee funds and corresponding operating agencies, and establish and improve the energy-saving financing intermediary mechanism for guaranteeing funds to start bank loans. A set of government, industry associations, and LED business cooperation platforms have yet to be established.
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