In the world of business, there's a term called "Wanli," which means achieving great returns with minimal cost. Making profits in economic activities is no easy task, but Jiang Shanming, the president of Sichuan Dazhou Iron and Steel Group Co., Ltd. (known as Dagang), has just pulled off a unique deal that’s even more efficient than traditional profit-making: a “sale and sale†model where he didn’t spend a penny but stands to gain millions every year.
The story began in 2007 when Dagang partnered with China Energy Conservation and Environmental Protection Technology Investment Co. (referred to as the environmental protection company) for an energy-saving renovation of two 480-cubic-meter blast furnaces. Instead of investing their own money, they used a groundbreaking approach known as the "contract energy management" system. The project, called TRT (Top Gas Recovery Turbine), aimed to generate electricity from the residual pressure of the blast furnace.
This kind of technology was already common in large-scale steel plants with blast furnaces over 1000 cubic meters, but applying it to medium-sized ones like Dagang’s was rare. The TRT system works by capturing the pressure from the top of the blast furnace and using it to drive a turbine connected to a generator. This innovative method, similar to the “one for two†principle in air conditioners, allows two small blast furnaces to power one turbine, generating significant electricity without any upfront costs.
Construction started in late May 2007, equipment installation took place in September, and by December 25, the system was successfully connected to the grid. At the completion ceremony on January 10, 2008, Jiang was thrilled. The project now generates 28 million kWh annually, saving over 15 million yuan in electricity costs each year. More importantly, it helped Dagang meet its energy-saving targets, earning praise from both the government and the public.
The contract energy management model allowed Dagang to avoid any initial investment. The environmental protection company covered all the costs—design, equipment, installation, and commissioning. After the project was completed, Dagang only had to pay a portion of the annual savings to the company. Once the contract ended, the entire system was transferred to Dagang at no additional cost.
According to Li Longsheng, deputy general manager of the parent company, this model ensures that the risk is entirely on the service provider. Enterprises are paid only after seeing real energy savings, and the payment comes from the saved costs, not from their operational funds. It’s a win-win situation, where both parties benefit from the energy efficiency improvements.
Experts estimate that over 150 medium-sized blast furnaces across the country could benefit from similar energy-saving projects. If implemented nationwide, this could save up to 3 billion kWh annually and generate over 2 billion yuan in economic value. Today, companies like China Energy Conservation Investment Corporation are leading the way, offering a wide range of services beyond just blast furnace upgrades, including straw power generation, waste-to-energy, and sewage treatment.
With the right partnerships and innovative approaches, businesses can achieve sustainability without sacrificing profitability. Dagang’s success story shows that smart investments in energy efficiency can lead to long-term gains, proving that sometimes, doing nothing can be the most profitable move.
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