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Today Mitsubishi Heavy Industries, Ltd. (MHI) concluded an agreement with ZGPT Diesel Heavy Industry Co., Ltd. (ZGPT), a Chinese manufacturer of stationary and marine engines, under which MHI will license its KU gas engine technologies to ZGPT. The move is targeted in the near term at seeking further penetration of the KU gas engines in the Chinese market as that market continues to mark robust growth, and beyond the near term at entering the local market for gas-fired distributed power generation system, a niche that is expected to greet sharp expansion in demand going forward.

The newly concluded licensing agreement pertains to manufacture and marketing of MHI's 14KU30GSI 4,450 kilowatt (kW) class gas engine. Plans call for expansion of licensed model variations once business relating to the 14KU30GSI gets firmly on track.

China has a plan to introduce a total of 50 gigawatts (GW) natural gas-fired distributed generation systems by 2020. However, because the country is promoting domestic production, local production is indispensable. Until now MHI has been seeking market entry through acquisition of a production base for its KU gas engines, while ZGPT has sought to add competitive gas engines to its lineup. The aims of the two companies have thus meshed in reaching the new licensing agreement.

ZGPT, which is based in Hangzhou and established in 2005, is a major company dedicated to engine related business, and undertakes the manufacture, sale and servicing of land- and marine-use diesels. MHI licensed medium-speed diesel engine technologies to ZGPT in November 2010 and has established a positive relationship with the company.

The KU engines are one of MHI's best-selling products, offering the world's highest levels of power generation efficiency in their class and outstanding environmental compatibility. Since delivery of the first unit in 1986, engines in the series have been widely adopted both in Japan and abroad as power generators for large-scale factories, co-generation systems and independent power provider (IPP) plants. They hold the top share of the Japanese domestic market.