R744.com: Which products using natural refrigerants will Danfoss focus on at this year’s China Refrigeration Exhibition?

Stephen Zhu: We already have a complete product range for CO2 commercial refrigeration solutions for the retail segment. This year we promoted the concept of “Full Store Energy Management”, an integrated approach that includes refrigeration, HVAC and lighting etc. for the whole store, and applicable to CO2 technology. We also introduced a new product , a monitoring controller to measure the performance of the whole system. In addition, we have the pack controller and evaporator controller packages that are already very popular in the European market and are now available in China.

R744.com: What has been your experience with CO2 as a refrigerant in commercial refrigeration in China and how would you evaluate progress in the Chinese market in general?

Zhu: CO2 for commercial refrigeration in China is still in the early development stage. The first store was only introduced in 2011, which is over a decade after the first store is opened in Denmark. The first subcritical CO2 store in Europe was built in Denmark in 1998 and followed by the first transcritical store around 2005. What we are seeing today in China is technology uptake by the early adopters. For large-scale market penetration, there are still challenges to be addressed such as cost and raising awareness. The cost of CO2 systems is estimated to be approximately 50% more than conventional solutions. Althogh the cost margin is narrowing down, it is a big investment of retailers. Meanwhile, the knowledge regarding CO2 solutions, especially on the contractor side is still low. This raises costs further because people need to invest even more resources when working with the new technology.

R744.com: When can we expect to see the first 100 CO2 stores in China?

Zhu: If people work fast, it can happen in less than ten years time. But this needs some pre-conditions to be met. For example, Chinese retailers need to find a new business model to improve profitability and compete with E-commerce. Currently, physical retailing of household items does not generate much profitability as consumers find it more convenient to buy on the Internet, whilst with regards to food retail, some E-commerce companies are looking into selling food items on the Internet. However this requires considerable investment in refrigeration food chain to ensure a secure food temperature. If retailers see that it is more profitable business opportunity to focus their investment on the physical retailing of food items, then I believe they will focus on the refrigeration equipment in their stores. More efficient and optimal refrigeration systems such as natural refrigerant technology will undoubtedly help today’s retailers to sell more food and competition with E-commerce. This shift could generate an opportunity for natural refrigerants in retailers in China.

R744.com: Does Danfoss organise any training activities for CO2 in commercial refrigeration applications? If so, where are these run and what does the training consist of?

Zhu: Currently we conduct dedicated training for targeted groups. For commercial refrigeration, it is still driven by global end users with specific contractors. However, we are evaluating the possibility, together with some partners, to scale this training up. It is key in the early stages to educate the market and to raise the awareness levels, as well as transfer knowledge about new technology.

R744.com: A lack of components for CO2 systems in commercial refrigeration has been regarded as a barrier for further market growth in China – what components are causing these barriers and is progress being made?

Zhu: From what we have seen I don’t think we are lacking components in China, although there are not that many companies offering the same components. For CO2 in commercial refrigeration applications, there are not yet many companies that seizing the business opportunity CO2 represents in China today. It requires resources to invest and develop this technology. Especially in the early stage of development, the production volumes are not reaching critical mass to significantly decrease the investment cost. For Danfoss, we started investing in CO2 technology in the early 1990s in Denmark. Although CO2 in not yet the major part of our business in China today, we are looking at developing business in that direction. Danfoss’ slogan is to promote “Engineering for Tomorrow” therefore we have to move to more sustainable technologies such as natural refrigerant solutions.

R744.com: How do you evaluate the market potential for transcritical CO2 solutions in commercial refrigeration in China?

Zhu: The booming of transcritical CO2 solutions will still take a long way to go in China, although the technology seems very promising. However, looking at the technology path that Europe followed, you can see that they started with subcritical solutions and shifted to transcritical solutions afterwards. We can expect the same development route in China. We can say that in the next five or ten years we will see more subcritical stores and followed by transcritical solutions, although I may be too conservative in this prediction.

Thank you!