UPDATED: Chinas leading air conditioner companies shift to R290

In China’s first technology roadmap for the home appliance industry, replacing HCFCs with new refrigerants will be the main task of China’s air conditioning industry in the future. As profit margins have become tighter, China’s leading air conditioner companies have shifted their attention to R290 (propane) to reduce costs and increase competitiveness. Update: Midea’s R290 compressor production line has become an official Montreal Pro

China’s air conditioning industry has passed its peak development period to enter into a period of constant growth. In recent years, facing the pressure of rising raw materials cost and labour, excessive production capacity and intensified inflation, reducing costs while increasing core competitiveness becomes the main task of most companies.

Reducing profits space calls for lowering costs and new technologies

According to the financial reports of five major household air conditional companies, the average gross profit of 2010 was 19.6%, 4% lower than that of the previous year. Price wars in China’s air conditioning market continue to put pressure on companies' profit margins. Therefore, the country’s big companies are gradually shifting their attention to adopting new technologies to gain profits again. As the amount of R290 needed in refrigeration system is 30 to 40% less than R22 many companies bet on propane as the future of the industry.

China’s A/C leaders bet on R290

Concretely, this year, China’s two leading air conditioner manufacturers Gree and Midea have released their research and application results of alternative refrigerant products. Gree announced the completion of the world’s first hydrocarbon refrigerant R290 split-type air conditioner demonstration production line. Key products of Midea using R290 have passed quality testing and manufacturing standards, and are ready to be commercialised. Both Gree and Midea have exhibited their new R290 products at major international HVAC shows.

GMCC R290 compressor line signed as UN Demonstration Project

At the “New Environmentally-friendly Refrigerant Key Technology Appraisal Conference” this year, Midea’s GMCC R290 compressor production line successfully passed technical evaluations. Its technology using refrigerant R290 was evaluated by the experts and won unanimous acceptance that the technology is safe, energy efficient and environmental friendly. Thanks to their efforts, Midea have become an official Montreal Protocol Implementation Demonstration Project funded by United Nations Multilateral Fund (MLF). Representatives from the United Nations, the China Ministry of Environmental Protection (MEP) and the China Household Electrical Appliances Association (CHEAA) witnessed the signing ceremony of the MLF Demonstration Project.

In recent years, Midea, one of China’s leading air conditioner producers has continuously invested in the research and development of market applications of natural refrigerants. The release of its R290 technology is an important step towards Midea’s concept of “technology achieves environmental protection”. Their R&D efforts have enabled Midea to find an environmental friendly substitute refrigerant, and the company has now developed some R290 compressor representative models adopting the latest DC inverter technology. The company has also developed DC inverter air conditioners with energy efficient grade level 1.

Roadmap aims to replacing HCFCs with HCs

Besides big air conditioner companies, hydrocarbon technologies are also encouraged by industrial associations. In December 2011, the China Household Electrical Appliances Association (CHEAA) issued China’s first technology roadmap for the home appliance industry with puts a focus on replacing HCFCs with new refrigerants. By 2015, the roadmap plans to reduce the consumption of HCFC-22 by 10% compared with the average amount of 2009 and 2010.

More importantly, it aims to realise the industrialisation of hydrocarbon technology and complete the replacement of HCFC-141b among companies producing refrigerators, freezers and electric water heaters. It calls upon the industry to widely adopt low GWP refrigerants and blowing agents such as CO₂ and R290. By 2020, the use of R744 (CO₂) as natural refrigerant in production of freezer will meet requirements of “Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment” (RoHS). Overall, by 2015, the roadmap aims to increase refrigerator energy efficiency by 20%, and by 2020 by another 15% based on 2015.

Multilateral Fund (MLF)

The Multilateral Fund was established by a decision of the Second Meeting of the Parties to the Montreal Protocol (London, June 1990) and began its operation in 1991. The main objective of the Multilateral Fund is to assist developing country parties to the Montreal Protocol whose annual per capita consumption and production of ozone depleting substances (ODS) is less than 0.3 kg to comply with the control measures of the Protocol. Currently, 147 of the 196 Parties to the Montreal Protocol meet these criteria. They are referred to as Article 5 countries.