StockMarketWire.com - China New Energy subsidiary Guangdong Zhongke Tianyuan New Energy Science and Technology (ZKTY) has completed and handed over the Xin'ao biogas plant.

CNE said the plant has now started commercial operation to recover and sell purified 7,000 cubic metres of biogas daily as fuel for domestic use.

In addition to the Xin'ao biogas plant, ZKTY has an agreement to design and build a bio-gas recovery and purifying plant at a beer brewery owned by Shenzhen-based Kingway Beer Group, with the intention that the purified biogas be sold to Shenzhen City Gas Group.

ZKTY expects to complete this project during the first half of 2012.

Under this agreement, ZKTY will bear the cost of constructing the biogas plant and co-share the revenue generated from the sale of biogas.

This plant will have a daily purified output of 7,000 cu m of biogas and generate an estimated total sales revenue of RMB8m annually.

ZKTY is also currently in advanced negotiation with a state-owned bio-ethanol company, based in Guangxi Province, to design and build a bio-gas recovery and purifying plant capable of generating 60,000 metre3 of biogas daily.

Under the proposed agreement which is being negotiated, ZKTY will bear the investment cost of constructing the facility and co-share the revenue generated from the sale of biogas, which is currently estimated to be around RMB30m a year.

CNE executive chairman Weijun Yu said: "The successful completion of the Xin'ao biogas plant enhances the company's reputation for providing integrated solutions to the biofuel and biochemical industries both in China and internationally.

"The board is confident that ZKTY's expertise and proven experience in designing and constructing ethanol production plants will help build a competitive strength for the Group in biogas production.

"Indeed, we intend to leverage our customer base to aggressively build the biogas recovery and purifying business, a business that can generate recurring cash flow with good margins for the company."