Sewage treatment plant
Sewage treatment plant
Business Model Description
Companies obtain permits from governments for wastewater treatment and earn revenue from wastewater treatment fees. Companies usually reach agreements with governments on the wastewater treatment volume, compound return, and payment methods and sign it through BOT (Build-Operate-Transfer), TOT (Transfer-Operate-Transfer).
Expected Impact
Sewage treatment can reduce water pollution, improve people's well-being and health, and improve sustainability both in urban and rural areas.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Hainan
- China: Gansu
- China: Hunan
- China: Yunnan
- China: Sichuan
Sector Classification
Infrastructure
Development need
Significant differences in terms of quality of the infrastructure exist between urban and rural areas in china. In rural areas, power grids are costly yet of poor quality, and water quality needs to be further improved. (1) China’s circular economy development faces great challenges including lack of standardization, difficulties in recycling low-value material etc. (2)
Policy priority
The 14th 5-Year Plan highlighted the importance of building a modern network of infrastructure that is smart, eco-friendly, safe, and reliable. (3)The State Council issued Action Plan for Cabon Peaking, in which promoting circular economy was listed among the ten major actions. (4)The "No. 1 Central Document"" for 2021 also highlighted the need to imporve rural infrastructure (5)
Gender inequalities and marginalization issues
Significant differences in the quality of infrastructure between urban and rural areas in China exist. Rural residents struggle to get access to quality and green infrastructure.
Investment opportunities introduction
The IOAs in the infrastructure sector center around low-carbon waste treatment, as well as building safer and smarter supply systems of water and electricity.
Key bottlenecks introduction
Infrastructure construction requires large amounts of investment, most of which is government-led or requires subsidies. In some fields, such as waste management, policies and regulations are to be improved; in the field of water and energy consumption, pricing mechanism is also in need of improvement.
Utilities
Development need
Affected by cliamte change, major rivers in eastern China have witnessed decrease in the runoff volume since the mid-20th century. Frequent cliamte-related disasters also reduce the availability of water resources, contributing to water shortage in China. Along with accerlerated global warming, China will face more water resource risks in the future. (6)
Policy priority
The ""14th Five Year Plan for Building a Water-saving Society"" stated that China plans to build a water-saving society. Measures must be taken to establish a comprehensive water pricing mechanism reflecting water scarcity and supply costs. Explore to establish an integrated water management mechanism and encourage the engagement of third-party enterprises in water supply. (7)
Gender inequalities and marginalization issues
There is still a huge gap between rural and urban areas in terms of the water quality and wastewater treatment capacity.
Investment opportunities introduction
The IOAs in this sector center around water supply and treatment, and smart water management system.
Key bottlenecks introduction
The water industry is still facing challenges such as single business model, strong geographical restrictions, and insufficient scale.
Water Utilities and Services
Pipeline Opportunity
Sewage treatment plant
Companies obtain permits from governments for wastewater treatment and earn revenue from wastewater treatment fees. Companies usually reach agreements with governments on the wastewater treatment volume, compound return, and payment methods and sign it through BOT (Build-Operate-Transfer), TOT (Transfer-Operate-Transfer).
Business Case
Market Size and Environment
> USD 1 billion
5% - 10%
The total revenue of the wastewater treatment industry increased from about 341.9 billion yuan in 2015 to about 498.5 billion yuan in 2019, with a CAGR of 9.9%. The market size of the wastewater treatment industry in China was around 500 billion yuan in 2020. (8)
Indicative Return
> 25%
The gross margin of the wastewater treatment business of Jiangxi Hongcheng Environment Co., Ltd., Chongqing Water Group Co., Ltd., and Beijing Enterprises Water Group (China) Investment, Ltd. in 2020 was 38.06%, 50.8%, and 35.06%, respectively, with an average value of 41.31%. (9) (10) (11)
Investment Timeframe
Long Term (10+ years)
In general, a wastewater treatment plant with a capacity of 50,000 tons/day requires an investment of about 100 million dollars, and the payback period is usually more than 10 years. (12)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Impact Case
Sustainable Development Need
From 2011 to 2019, the total volume of sewage discharge in China increased year by year. By 2019, that in urban, rural and village areas in China reached 55.5, 10.2 and 21.6 billion tons respectively. The huge volume requires a sewage treatment industry of the same scale to meet the needs. (14)
Gender & Marginalisation
Urban areas are outperforming rural areas in terms of sewage treatment capability, which indicates a prominent regional imbalance. By 2020, the sewage treatment rate in urban areas was 97.53%, cpmpared with 95.05% in village but 21.67% in rural areas.(15)
Expected Development Outcome
Wastewater treatment can reduce water pollution, improve water environment quality, and benefit the healthy development of human society.
Gender & Marginalisation
Rural sewage treatment capacity can be significantly improved, alleviating the unbalanced regional development issues.
Primary SDGs addressed
6.3.1 Proportion of domestic and industrial wastewater flows safely treated
China's urban waste water treatment ratio is 97.9% in 2021 (24）
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Indirectly impacted stakeholders
People
Outcome Risks
Wastewater treatment plants may have impacts on the surrounding environment, especially in terms of odor.
Impact Risks
Excessive discharge of wastewater and improper disposal of sludge might lead to secondary pollution.
Impact Classification
What
The outcome is very likely to be positive, important, long-term and large-scale,for investment in this IOA can reduce water pollution and improve water utilization efficiency.
Who
Residents in rural areas/towns, where sewage treatment facilities are backward and incomplete, and those living in water-scarce regions can enjoy improved access to water.
Risk
Excessive discharge of sewage and improper disposal of sludge might lead to secondary pollution.
Impact Thesis
Sewage treatment can reduce water pollution, improve people's well-being and health, and improve sustainability both in urban and rural areas.
Enabling Environment
Policy Environment
(Policy document): According to the 14th Five-year Plan, an integrated environmental infrastructure system covering the disposal and monitoring of wastewater, garbage, and solid waste is expected to be built, forming a system extending from cities to organic towns and villages. (16)
(Policy document): The ""14th Five-year Plan of Urban Sewage Treatment Development"" was published, stating the goal of the centralized collection rate of domestic sewage in cities and countris. The sewage treatment in areas vulnerable to water pollution should meet the Ai emission standard. (17)
(Policy document): The national wastewater collection efficiency is expected to achieve significant improvement by 2025. Wastewater treatment in areas vulnerable to water pollution should meet higher standards. (18)
Financial Environment
In May 2021, the NDRC issued a notice on supporting the construction of environmental infrastructure projects such as wastewater treatment and resourceful utilization. Support for a single project would not exceed 50 million yuan, except for major innovative model projects. (21)
Fiscal incentives: The ""Catalogue of Environmental Protection and Energy and Water Conservation Projects Eligible for Enterprise Income Tax Preferences (2021 Version)"" included wastewater treatment projects in urban and rural areas. (22)
Other incentives: In July 2019, the Ministry of Finance clearly stated that the subsidy funds are used to support 4 types of projects, including the development of sponge cities, demonstration treatment of black malodorous water bodies, and sewage treatment. (23)
Regulatory Environment
An entity that directly or indirectly discharges industrial or medical sewage into waters is allowed to discharge only after a pollutant discharge license is obtained. The pollutant discharge license shall specify types of pollutants, concentration, total discharge, etc. (19)
In 2013, the ""Regulation on Urban Drainage and Sewage Treatment"" stated that the urban sewage treatment facility maintenance and operation entities cannot discharge sewage that fails to meet relevant standards, and detect the water quality as well as report regularly. (20)
Marketplace Participants
Private Sector
Beijing Philisense Technology Co., Ltd., Integrated Electronic Systems Lab Co., Ltd., Suntront Technology Co., Ltd.
Target Locations
China: Hainan
China: Gansu
China: Hunan
China: Yunnan
China: Sichuan
References
- (1) National Development and Reform Commission, Ministry of Finance, Ministry of Housing and Urban-Rural Development, State Administration for Market Regulation, and National Energy Administration, 2020, Opinions on the High-Quality Development of Urban Water, Electricity, Gas and Heating Industry By Reviewing and Standardizing Charges, http://www.gov.cn/zhengce/content/2021-01/06/content_5577440.htm
- (2) National Development and Reform Commission, 2021, Fourteenth Five-Year Plan for the Development of Circular Economy, http://www.gov.cn/zhengce/zhengceku/2021-07/07/5623077/files/34f0a690e98643119774252f4f671720.pdf
- (3) Xinhua News Agency, The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
- (4) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030, http://www.gov.cn/zhengce/content/2021-10/26/content_5644984.htm
- (5) https://www.gov.cn,2019, Rural Infrastructure Construction Upgrading is in Urgent Need, http://www.gov.cn/zhengce/2019-10/14/content_5439186.htm
- (6) China Meteorological Administration, 2020, Climate Change and Water Security, http://www.cma.gov.cn/2011xzt/2020zt/20200323/2020032307/202003/t20200318_549083.html
- (7) State Council, 2021, 14th Five Year Plan for the Construction of a Water-saving Society, http://www.gov.cn/zhengce/zhengceku/2021-11/09/5649875/files/146d1a6fcb7c42f3a4aad9dca6104719.pdf
- (8) Nationwide Energy Information Platform, 2020, Analysis of the current market and development trend of China's wastewater treatment industry in 2020, https://baijiahao.baidu.com/s?id=1681510465354422954&wfr=spider&for=pc
- (9) Jiangxi Hongcheng Environment Co., Ltd., 2021, 2020 Annual Report, http://static.cninfo.com.cn/finalpage/2021-04-22/1209757050.PDF
- (10) Chongqing Water Group Co., Ltd., 2021, 2020 Annual Report, http://static.cninfo.com.cn/finalpage/2021-04-02/1209615790.PDF
- (11) Beijing Enterprises Water Group (China) Investment, Ltd., 2021, Corporate Bonds 2020 Annual Report, http://www.sse.com.cn/disclosure/bond/announcement/company/c/2021-04-28/2842116333400259677692464.pdf
- (12) Baidu Wenku, 2022, Basic facts on wastewater industry, https://wenku.baidu.com/view/c486d01980c4bb4cf7ec4afe04a1b0717fd5b303.html
- (13) water.hc365.com, 2019, 2019 Market Pattern of the Wastewater Treatment Industry in China, https://baijiahao.baidu.com/s?id=1647607267099068234&wfr=spider&for=pc
- (14) Forward Intelligence, 2022, Current market and development prospects of Wastewater treatment industry in China: Market size is expected to exceed 200 billion yuan in 2021, https://bg.qianzhan.com/trends/detail/506/220401-1a162959.html
- (15) China Urban Water Association, 2021, 2020 China Urban-Rural Construction Statistical Yearbook Published: There are 2,618 urban sewage treatment plants nationwide, with over 200 in Guangdong, Shandong, and Jiangsu Provinces respectively, https://www.cuwa.org.cn/guoneizixun/10476.html
- (16) Development and Reform Commission, 2021, Guidelines on Promoting the Wastewater Resourceful Utilization, http://www.gov.cn/zhengce/zhengceku/2021-01/11/content_5578974.htm
- (17) State Council, 2021, 14th Five Year Plan for Urban Wastewater Treatment and Resourceful Utilization, ndrc.gov.cn/xxgk/jd/jd/202106/t20210615_1283251.html?code=&state=123
- (18) Development and Reform Commission, 2021, Guidelines on Promoting the Wastewater Resourceful Utilization, https://www.ndrc.gov.cn/xwdt/tzgg/202101/t20210111_1264795_ext.html
- (19) National People's Congress, 2017, Water Pollution Prevention and Control Law of the People's Republic of China, http://www.npc.gov.cn/npc/sjxflfg/201906/863e41b43f744efda56b14762e28dc6f.shtml
- (20) State Council, 2013, Regulation on Urban Drainage and Sewage Treatment, http://www.gov.cn/flfg/2013-10/16/content_2508291.htm
- (21) Development and Reform Commission, 2021, Special Administrative Measures on the Central Budgetary Investment Plan for Pollution Control, Energy Saving, and Carbon Reduction, http://www.gov.cn/zhengce/zhengceku/2021-05/19/content_5608645.htm
- (22) Ministry of Finance, 2021, Announcement on Publishing the Catalogue of Environmental Protection and Energy and Water Conservation Projects Eligible for Enterprise Income Tax Preferences (2021 Version) and the Catalogue of Corporate Income Tax Credits for the Comprehensive Use of Resources (2021 Version), http://www.gov.cn/zhengce/zhengceku/2021-12/29/content_5665116.htm
- (23) Ministry of Finance, 2019, Notice on the Issuing the Administrative Measures on the Urban Pipeline Networks and Sewage Treatment Subsidy Funds, http://www.gov.cn/xinwen/2019-07/03/content_5405556.htm
- (24) Ministry of Housing and Urban-Rural Development Releases, 2022, Communiqué on China's Urban Construction Status 2021 http://swj.wuhan.gov.cn/tzdt/hykd/202210/t20221009_2054179.html