Sunpower's Changrun project successfully connected to the State Grid

NANJING, China, Sept. 18, 2018 /PRNewswire/ -- Mainboard-listed Sunpower Group Ltd. ("Sunpower" or the "Group") (SGX: 5GD.SI), an environmental protection solutions specialist with a strong focus on expanding into anti-pollution investment projects ("Green Investments" or "GI") which generate long-term intrinsic value in the form of recurring income and cash flows, today announced that its GI project in Hebei province, a centralised cogeneration facility which produces steam and electricity (the "Changrun Project") has successfully connected to the State Grid and will commence the sale of electricity from September. The addition of electricity, a by-product of the production of steam, is expected to help to diversify Sunpower's GI revenue mix and improve earnings and profitability of the Changrun Project as well as the Group.

Air pollution in Hebei province is among the most severe in China. Six of the country's ten smoggiest cities in 2017 were in Hebei, according to the Ministry of Environmental Protection^[1]. The Changrun Project is situated on over 204,000 square metres of land in the Gaoyang Circular Economy Industrial Park (the "Industrial Park"). The Group's total investment in the Changrun Project amounts to approximately RMB934 million and it is currently equipped with 2x220 t/h steam boilers and 2x25MW electricity generators. The Changrun Project came online and started to supply steam in the third quarter of 2017.

The Changrun Project enjoys an exclusive 30-year concession from the local government to supply steam, electricity and heat, and is the only centralised cogeneration facility in the Industrial Park. Gaoyang County is one of the largest textile manufacturing centres in China, accounting for 33% of China's total output of towels and blankets. The advantage of exclusively serving the non-discretionary operational needs of more than 150 captive customers, mainly in textile, dyeing and printing industries, has allowed the Changrun Project to enjoy high utilisation as well as strong cash flows due to its ability to require prepayment. As such, it is able to enjoy an attractive double-digit internal rate of return ("IRR") and high-quality cash flows.

China is amidst an all-out blitz on air pollution, and increased enforcement of various environmental protection laws and policies remain at the top of its agenda each year. In particular, the Chinese regulations now require the phase-out by 2020 of small high-emission coal-fired boilers which have been identified as one of the main sources of air pollution, and to switch over to clean centralised steam and electricity plants like Sunpower's. According to Xinhua news, the Hebei provincial government aims to mandatorily eliminate 9,027 small coal-fired boilers by 2020^[2]. The Changrun Project is expected to benefit from the crossover demand driven by such mandatory closure, as well as enjoy the long-term growth potential brought by the organic expansion of the Industrial Park. To-date, the Changrun Project has replaced 73 individually-owned boilers, and could help to reduce SO₂, NOx and dust emissions by thousands of tons a year.

The Changrun Project combines synergies from Sunpower's traditional Manufacturing and Services ("M&S") segment and the benefits of the Circular Economy to enable a business model that is reliable and cost effective, with a high entry barrier against competition. The Circular Economy model is a new paradigm in managing industrial resources that goes beyond ordinary recycling. Sludge and treated wastewater from a neighbouring water treatment plant are used as fuel and a clean water substitute to run the boilers of the Changrun Project. Sunpower also sells its own wastes such as ammonium sulfate and ash to fertilizer and building material factories. Overall, this helps to reduce costs and improve the operational efficiency of the Changrun Project.

Mr. Guo Hong Xin, Executive Chairman of Sunpower, said, "Following the connection to the State Grid, our Changrun Project is now in an even stronger position to bring in a larger stream of recurring, high-quality income and cash flows to the Group. The Changrun Project is Sunpower's first and largest GI project and our proven success in this project has boosted our confidence in building up a sizeable GI portfolio by 2021. Including Changrun, the Group currently has 7 GI plants in operation and another 5 facilities under construction or to be constructed in the near future."

"Moving forward, the Group will continue to focus its efforts on growing the GI business which has been earmarked as the Group's value creator and growth driver to improve shareholders' value over the long term. As a first mover in GI industry, we believe our success in business will also benefit the green revolution of China for air pollution, bringing back blue skies to every person living in this land," Mr Guo continued.

About Sunpower Group Limited

Founded in 1997, Sunpower Group Ltd. (SGX: 5GD.SI) is an environmental protection solutions specialist in proprietary energy saving and clean power technologies, with a strong focus on expanding into anti-pollution investment projects ("Green Investments") which generate intrinsic value in the form of long-term, recurring and high quality cash flows.

With proven capabilities in technology innovation and proprietary clean energy solutions, Sunpower is shaping a green future for itself by continuously developing its business segments of Green Investments (GI) and Manufacturing & Services (M&S).

Sunpower has rapidly expanded its GI business in recent years by leveraging on its existing core technologies of high-efficiency heat transfer, long distance heat insulated steam distribution, energy-saving and ultra-low emission clean power generation. The GI segment is mainly focused on the investment and operation of centralised steam and electricity supply business, which is expected to bring in additional stream of recurring income to the Company.

For M&S segments, Sunpower has delivered superior quality products and services to approximately 1,500 customers in over 30 countries across the globe to date. Its reputable customer base includes BASF, BP, Shell, SABIC, DowDuPont, Alcoa and Mobil, China Petrochemical Corporation (SINOPEC), China National Petroleum Corporation (CNPC), China National Offshore Oil Corporation (CNOOC) and China Shenhua. 

For more information, please refer to: http://en.sunpower.com.cn