The air conditioning industry calls for the establishment of a long-term energy-saving mechanism
Due to the subsidy amount being higher than that of the "Appliances to the Countryside" program, the "Energy-saving Products for the People's Benefit Project," which was only implemented in June last year, sold 4.2 million first and second-class highly energy-efficient air conditioners by the end of last year. In contrast, throughout the whole of last year, the "Appliances to the Countryside" program sold only 3.0116 million air conditioners with an energy efficiency rating of level three or above.
However, this situation may change in the near future.
"It was originally reported that the People's Benefit Project would be adjusted on March 1st, but now it might be postponed until June 1st," said a mid-level manager at Midea Electrical Appliances (000527.SZ). A mid-level manager at Zhigao Holdings (00449.HK) also pointed out that lowering the subsidies for energy-saving products will definitely affect the sales of air conditioning companies. Currently, the air conditioning manufacturers have received word that the adjusted subsidy plan for the "Energy-saving Products for the People's Benefit Project" is as follows: First-class energy-efficient air conditioners will receive a maximum subsidy of 150 yuan, while second-class energy-efficient air conditioners will not receive any subsidy.
Conflict
Last year, the two companies benefited greatly from the "People's Benefit Project." According to data provided by Zhigao Holdings, their cumulative sales of "energy-saving people's benefit" air conditioners reached 908,000 units, with a market share as high as 21.6%. Gree Electric (000651.SZ) won the most bids in the first, second, and third batches of the "People's Benefit Project" with 779 winning models, making them the company with the most winning air conditioners in the project.
The Energy-saving People's Benefit Project provides subsidies ranging from 300 to 850 yuan per unit for first and second-class highly energy-efficient air conditioners, while the fiscal subsidy for the "Appliances to the Countryside" program is 13% of the product's selling price. Air conditioners eligible under this program are those with an energy efficiency rating of level three or above, with most product prices ranging from 1800 to 2500 yuan, meaning the subsidy amount ranges from 230 to 320 yuan, and purchasers must have a rural household registration.
"The implementation of the People's Benefit Project indeed created a conflict with the Appliance to the Countryside policy, and the difference in air conditioner sales figures is the best proof," revealed a mid-level manager at Midea Electrical Appliances to the "First Financial Daily." Whether it is the subsidy for the Appliance to the Countryside program or the Energy-saving People's Benefit Project, both are funded by the national treasury. However, the actual market feedback shows that the retail price of level-three energy-efficient air conditioners under the Appliance to the Countryside program is actually more expensive than level-one energy-efficient air conditioners under the Energy-saving People's Benefit Project.
Prelude to Adjustment
On March 3rd, the General Administration of Quality Supervision, Inspection, and Quarantine and the Standardization Administration of China released the new mandatory national standard "Minimum Energy Efficiency and Energy Efficiency Grades for Room Air Conditioners," which will come into effect on June 1st. Unlike the old five-grade energy efficiency standard, the new energy efficiency standard has been reduced to three grades. Grade 1 indicates the highest energy efficiency; Grade 2 represents the minimum energy-saving evaluation value, which is the lowest requirement for evaluating whether an air conditioner product is energy-saving; Grade 3 represents the minimum energy efficiency limit value, which serves as the market entry threshold after the standard is implemented.
The adjustment of the energy efficiency standard is also seen by the industry as a prelude to the adjustment of the "Energy-saving Products for the People's Benefit Project" policy. After the new energy efficiency standard is implemented, the current Grade 2 energy-efficient air conditioners will become Grade 3 energy-efficient air conditioners, thus losing their subsidy eligibility. The subsidy intensity for the current Grade 1 energy-efficient air conditioners will also significantly decrease.
"Frequency conversion air conditioners' market share will increase significantly this year," said Yang Jun, General Manager of Guangzhou Midea Air Conditioning Sales Company. Frequency conversion air conditioners have never entered the "Energy-saving Products for the People's Benefit Project" and were included in the "Appliances to the Countryside" program this year. With the reduction in subsidies for fixed-frequency air conditioners with Grade 1 and Grade 2 energy efficiency, the price difference between them will narrow, naturally leading consumers to choose frequency conversion air conditioners.
Recently, reports issued by Suning Appliances (002024.SZ) and Gome Appliances (00493.HK) analyzing the air conditioning market both indicated that this year will see the popularization of frequency conversion air conditioners. Suning expects that the market share of frequency conversion air conditioners will reach 30%.
"The air conditioning products of the People's Benefit Project are cheaper than those in the Appliance to the Countryside program, so they sell better naturally," said Li Xinghao, Chairman and President of Zhigao Holdings, who is attending the Two Sessions in Beijing. He submitted a proposal together with Dong Mingzhu, President of Gree Electric, to establish a long-term mechanism for the Energy-saving People's Benefit Project.
The difference in their proposals lies in that Li Xinghao suggests providing special subsidies for products exceeding the national Grade 1 energy efficiency standard (such as air conditioners with an energy efficiency ratio of over 3.4), where the higher the energy efficiency ratio, the larger the subsidy amount should be, to encourage and support the industry and enterprises in increasing their investment in energy-saving and consumption-reducing technologies. On the other hand, Dong Mingzhu believes that short-term fiscal subsidies cannot sustain the long-term operation of the Energy-saving People's Benefit Project. Fiscal subsidies should be canceled, and the regulation and driving role of taxation should be used to protect the long-term mechanism of energy-saving benefits for the people.