Recently, China Recycling Energy announced the expansion of its waste-to-energy project portfolio with the acquisition of a power generation system. Xi'an TCH Energy Technology Co., a wholly owned subsidiary, entered into an asset transfer agreement with Shenqiu Yuneng Thermal Power Co., involving a set of 12 MW capacity power generation system. The transaction was recognized for accounting purposes immediately.
China Recycling Energy Corporation provides energy saving and recycling products and services in the People's Republic of China. The company engages in the design, sale, installation, lease, and operation of top gas recovery turbine systems (TRT) and other renewable energy products. It also builds cement low temperature heat power generator (CHPG) and waste gas power generator (WGPG) systems. The company, through a joint venture, Inner Mongolia Erdos TCH Energy Saving Development Co., Ltd, with Erdos Metallurgy Co., Ltd., recycles waste heat from Erdos Metallurgy Co’s metal refining plants to generate power and steam. China Recycling Energy Corporation offers its products and services to enterprises in the iron and steel, cement, coking, and metallurgy industries.
Under the assets transfer agreement, Xi'an TCH purchased a set of 12 MW biomass power generation systems from Shenqiu for about $11 million. Xi'an TCH will then lease the biomass power generation system to Shenqiu for a leasing period of 11 years under which the company receives lease payments of about $280,000 per month for the full period of the lease. At the end of the lease, Xi'an TCH will transfer ownership of the biomass power generation systems back to Shenqiu at zero cost.
With this acquisition, China Recycling Energy now has 13 waste-to-energy projects in operation totaling 133 MW and 2 waste-to-energy projects under construction totaling an additional 55 MW.
Mr. Guohua Ku, Chief Executive Officer of China Recycling Energy, explained the importance of the acquisition. He said, "The acquisition of this power generation project is a very exciting development for CREG and our new customer, Shenqiu. The government led consolidation of small players in the coking industry as well as rising coal prices has resulted in the shutting down of numerous coking plants and their power generation capabilities--such is the case with Shenqiu. We are pleased to be able to acquire this power generation system and make it operational again as an eco-friendly system fueled off local agriculture and biomass waste. This system integration not only expands our technological capabilities and aptitude in this area but also contributes to our growing recurring revenue stream of interest income on sales-type leasing beginning in the fourth quarter 2011."