Currently, the Zone has no centralised steam facility and each manufacturing plant relies on its own individual small coal-fired boilers for steam. The small boilers are highly energy inefficient and very polluting with carbon and pollution emissions.
The Group’s wholly-owned subsidiaries, Sunpower Clean Energy Investment (Jiangsu) Co., Ltd. ("Sunpower Clean Energy", and Sunpower Technology (Jiangsu) Co., Ltd. ("Sunpower Technology") have entered into a joint venture agreement with Huai’an Qinglian Environmental Protection Engineering Co., Ltd., a subsidiary of the Lianshui Economic Development Zone’s Central Management Committee, to form an entity to invest in the Project together. The Group will hold 95% equity stake in the newly formed joint venture entity.
Phase I of the Project will comprise two coal-fired boilers with a capacity of 40 tonnes per hour each and steam distribution pipelines, supplying steam to more than 20 companies in the Zone. The Project was secured on a BOT basis for a concession period of not more than 30 years and is expected to commence operation in the second half of 2016. Following the Changrun Project (announced on 23 December 2015), the Lianshui Project is another centralised steam low carbon and pollution emission project which will contribute to the Group’s EPC revenue and bring in another stream of recurring income.
Clean coal-fired boilers will be adopted in this Project as it is highly energy efficient, less polluting, has low operating cost and safer to operate.
According to the agreement, once the Project is in operation for 30 days, the Zone’s authority will close down all the existing individual coal-fired boilers within the Project in one month and disallow the usage of individual coal-fired boilers by new industrial projects or tertiary industrial projects.
In recent years, China is facing severe air pollution which is mainly attributed to the usage of a large number of small capacity coal-fired-boilers, in which most of them do not adopt pollution preventive measures and do not have emission control. In order to control air pollution and smog, the government has rolled out a series of environmental policies, laws and regulations, including mainly eliminating coal-fired-boilers with a capacity of 10 tonnes per hour and below in Jiangsu Province by end of 2017.
Mr. Guo Hongxin, Chairman of Sunpower Group comments, "As we mentioned earlier, greater business opportunities will be available for the Group as the environmental-related industry in China is growing rapidly. Capitalising on the Group’s cutting-edge technologies, we will be continuously expanding into businesses related to control of air pollution and haze via BOT and BOO models. This would further strengthen our recurring income stream and thus deliver greater value to the shareholders."
