EMC mode stretches the return cycle LED lighting enterprises face transformation (1)

Chen Bin, general manager of the LED tunnel light leading enterprise Guangdong Zhonglong Company, is somewhat distressed. Recently, Zhonglong was always required to adopt the contract energy management (EMC) mode when participating in some bidding for LED tunnel lights in China.

The new model not only imposes strict requirements on equipment, technology and capital, but also lengthens the recycling cycle of project revenues, enabling enterprises to take on more risks.

“Zhonglong is an LED lighting manufacturer. If the EMC model is adopted, it means that Zhonglong will transform from a manufacturer to a service provider.” He believes that local governments should calmly think about the implementation mode and scope of the new model, otherwise the transformation pressure may Will kill some manufacturers with real technical strength and experience.

Contrary to Chen Bin’s pessimism, Li Xuliang, the chairman of LED lighting leading company, is more optimistic. The new model can solve the problem of LED street lighting standards, product quality and availability.

Transformation service

On April 6, the State Council approved the Opinions on Accelerating the Implementation of Contract Energy Management to Promote the Development of Energy-Saving Service Industry jointly formulated by the National Development and Reform Commission and other ministries and commissions (hereinafter referred to as the “Opinions”). The "Opinions" require banks and other financial institutions to encourage innovative credit products based on the characteristics of financing needs of energy-saving service companies, broaden the scope of collateral, simplify application and approval procedures, and provide financial services such as project financing and factoring for energy-saving service companies.

The so-called "contract energy management" is a new model of the energy-saving service industry. That is, the professional energy-saving technology service company accepts the entrustment of the customer (energy-saving owner enterprise), signs the energy service contract with the customer, implements the energy-saving project with its own funds, and provides the one-stop service completion contract for the equipment, technology and capital necessary for the energy-saving improvement. Gain revenue by saving energy costs for customers.

“Because the domestic “Ten Cities and Ten Thousand Cities” are actively promoting, local governments also hope that the EMC model will bear fruit in the field of LED street lighting.” Chen Bin pointed out that some enterprises lacking capital and technical capabilities have already rushed into the LED street lighting industry. There are more than one thousand LED street lamp companies in China, and the market order is somewhat chaotic.

Chen Bin said that Zhonglong has done LED lighting for 6 years. At present, the energy-saving ratio of products is only about 35%, while some newcomers claim to save 70%. He thinks this can't be done. What most people can't stand is that accepting the EMC model is tantamount to forcing the role of Zhonglong to change from a manufacturer to a service provider.

Because, after installing the LED street light for the owner, the payment is made into a company account by a penny of the energy cost saved for the customer every month. In the long payback period, LED street lamp manufacturers are also responsible for product maintenance.

"If there are projects all over the country, is it necessary for Zhonglong to build a service team in all cities? How many people do you have." Chen Bin said.

Perhaps based on this, recently, in a tunnel lighting project in Chongqing, six successful bidders such as Zhonglong, Shanghai Sansi and Philips collectively opposed the adoption of the EMC model. The final compromise result is: segmented lighting is not used, basic lighting is used.

Chen Bin believes that compared to LED street lights, 24-hour lighting tunnel lights should be more suitable for EMC mode.

According to industry insiders, the reason why most LED street lamp manufacturers are reluctant to adopt the new model is mainly because the “recycling period is too long.” At the beginning of this year, many banks were interested in the emerging phenomenon of EMC mode, but due to power saving and power saving calculations. Issues such as standards have not been implemented for the time being.

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