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Incredible growth plans for Chinese geothermal district heating JV

Incredible growth plans for Chinese geothermal district heating JV Geothermal Installation, Xian Yang, Shaanxi Province, China (source: Sinopec Green Energy Geothermal Development)
Alexander Richter 4 Sep 2021

Leading geothermal district heating company Sinopec Green Energy Geothermal is expecting to more than triple its current geothermal heating capacity over the next five years.

The Chinese-Icelandic geothermal district heating joint venture Sinopec Green Energy Geothermal Development Co. (SGE)  has announced expectations to grow its business by 25% annually for the next five years, given the increasing demand for clean energy heating, so South China Morning Post earlier this week.

A Sinopec Green Energy Geothermal executive expects that the heat floor space by the company will reach the size of New York’s Manhattan by the end of 2021. The company is worldwide the largest developer of geothermal district heating networks.

The company is a joint venture between Iceland-based Arctic Green Energy, which owns 46 per cent, and state-owned oil and gas giant, which owns the remaining 54 per cent.

“China is adopting geothermal because geothermal district heating is by far the most economic means of heating available” and  also “answers China’s fundamental policy of carbon neutrality and [combating air pollution].”, so Haukur Hardarson, chairman of Arctic Green and vice-chairman of the joint venture.

China has great low-to-mid temperature resources and while power generation has not played a large role, the impact geothermal energy heating can have is tremendous and part of the “smoke-free cities” plans by China.

Sinopec Green Energy was formed in 2006, and currently holds about a 35 per cent share of China’s geothermal district heating market, having seen heating capacity, revenue and operating profit grow 25 to 35 per cent annually in the past five years, Hardarson said.

Its current covered floor space heated with geothermal energy  represents more than 60 million square metres,  across 60 locations in seven provinces by the end  of  the year.  The overall floor space expected in five years time is 150 million square metres.

Sinopec Green Energy Geothermal has secured the development rights for projects that could expand its floor space by 300 million square metres.

The company is planning to go for an IPO, yet with no concrete and defined time frame yet, and is open to strategic investments.

Earlier this year, it was announced that Singapore sovereign wealth fund GIC invested US$ 240 million in Arctic Green Energy for a stake of roughly  40% in the company supporting its expansion in Asia and  Europe. In 2020, it secured $200 million in funding by Asian Development Bank ADB.

The company’s competitors in China are PetroChina, we reported on their plans this week, as well as privately-controlled ENN Energy.

Source: Southern China Morning Post