One year ago, the Edinburgh-Shenzhen Creative Exchange (ESCE) was established with two incubation centres launched in Edinburgh, Scotland’s historic capital and Shenzhen in China respectively.
As part of the celebration, five Scottish startups were awarded the “Create in Shenzhen Competition” prize: Cobra Simulation, Coda Octopus, Freakworks, Sainted Media, and Sunamp. They were chosen through a public competition to present their innovations in the field of creative industries or technologies in Shenzhen. The mission was organised and sponsored by Edinburgh City Council and the Shenzhen Creative Investment Group. Representatives from each company spent six days in Shenzhen and had the opportunity to visit local companies, engage with them, and develop their business. Furthermore, each company had the opportunity to demonstrate their products to an audience of selected persons at a dedicated event that took place during those days.
As International Business Development Manager at Sunamp Ltd, I was given the opportunity to represent Sunamp during that week in Shenzhen, and in particular to showcase our first product, SunampPV, a compact, high power thermal storage based on phase change materials.
Shenzhen and China's market for water heaters
Less than 40 years ago, Shenzhen was a fishers’ town of 30,000 inhabitants facing Hong-Kong. After being declared a Special Economic Zone by the Chinese government, it grew to the current 20M+ metropolitan area. Two things represent particularly well this quick growth and the high population density of Shenzhen which has 7,5000 people per square kilometre compared to ca.5,500 per square kilometre, for 8.5 million persons in London and its surrounding area: Heavy traffic, despite the extensive and affordable network of public transport, and the multitude of residential and commercial tower blocks.
Being Sunamp, a company focusing on compact thermal storage for hot water and space heating and / or cooling, I couldn’t help but think about how space is really at a premium in cities like this, and the stress that the local grid has to deal with every day to satisfy the city’s requirements for hot water and air conditioning. While air conditioning is by large majority taken care of by window air conditioners, hot water is provided mainly by three technologies: electric storage; instantaneous gas boilers where gas is available; and solar water heaters for those living in the outskirt of the city in smaller houses well positioned to generate energy from the sun.
These are also the three main technologies for hot water generation in China: a report from global environmental and energy NGO CLASP  indicates that, at the end of 2012, they were respectively 29% (65,542,000 installed units), 30% (72,259,000 installed units), and 36% (85,347,000 installed units) of the hot water market. Considering their yearly trends, they will all be well above 100 million installed units today. The remaining sum is represented by gas combi water heaters (in cold zones), electric instantaneous, and heat pump water heaters, in an increasing trend but still below the one-million installed unit mark as of the end of 2012.
Storage-wise, of interest for me, a visit to a local appliance store made clear that 80-litre electric storage water heaters (an established market) and 100- to 200-litre heat pump water heaters (a growing market) are the most in demand, with a multitude of brands and models, and prices ranging from 5,049RMB (US$781) for an 80litres, high-end, electric storage heater, to 22,218RMB (US$3,440) for a 100-litre, high-end, heat pump water heater - but I could also find a 9,999RMB or (US$1,549) 200-litre heat pump water heater from a local brand. Despite the expected lower costs as compared to Europe, I found that they are not as cheap as somebody living abroad might expect, leaving foreign companies able to position their products well for the opportunity to compete with local brands.
Focus on solar PV
One of our products, SunampPV, has been developed to convert excess electricity generated by solar photovoltaic panels into heat, store it in phase change materials, and release it to generate high flow rates of hot water on-demand. It can also be installed in houses not fit for solar panels, and in those cases it will be programmed to charge during off-peak times with cheap electricity. As we wanted to have a working unit at Sunamp’s event, we sent one over to be placed at the cafeteria next to the conference room where I gave my presentation, just plugged into the electric mains for charging.
Once again, I was very positively impressed by the ease of installation of this unit, as a local plumber that saw it for the first time was able to install and commission it almost without supervision (I was running a meeting close-by during the installation), and after receiving a few indications by me mainly pointing at the pipes and at the sink where we connected the unit.
Yes, a translator was with me most of the time, but not on that morning. Even if it was not easy to spot PV panels in Shenzhen, probably due to shadowing and the really low roof surface to building load ratio, China’s investment in PV is huge, and they are heavily incentivised in both the residential and commercial sectors.
It can be slightly different in different regions, but, for example, one attendee to the Sunamp event from Shanghai said that, there, the incentive on PV-generated energy is of 0.42RMB/kWh (US$0.06/kWh), while each unit exported is paid an additional 0.4RMB/kWh (again, around US$0.06/kWh but of course slightly lower) for residential building. Retail prices at the time of my visit were close to 1RMB/kWh (US$0.15/kWh)*. What is also interesting is that the price for each kWh used from the grid has a steep increase if the yearly consumption exceeds a certain threshold, reason why it is even more advantageous to install PV and storage to maximise the self-consumption of renewable energy.
With this policy, and considering that China is world-wide leader for installed PV capacity in the residential sector, a bright future for storage is expected there, making it definitely one of the best markets worldwide. This was also clear by the number and level of conversations that I could have during those six days, and I will definitely go back.