Integrated smart energy segment

Currently there are two projects under this segment, namely the integrated smart energy project (the “Haitang Bay Integrated Smart Energy Project”) and the integrated district energy distribution project (the “Meishan Project”).

The Haitang Bay Integrated Smart Energy Project

The Haitang Bay Integrated Smart Energy Project (the “Project”), which combines the use of multiple clean energy sources, including solar, hydro, electricity, and natural gas (CCHP/Co-Gen), is to supply cooling, heating, as well as hot water to the hotels, shopping centers, and households in the Haitang Bay area of Sanya City, Hainan Province, the PRC. This project is conducted through the Group’s 70% held (30% held by the EDF Group) subsidiary company, EDF Changfeng (Sanya) Energy Co., Ltd. (“EDF CF”) with authorized capital of RMB119.1 million fully paid up in 2021. Under a 30-year concession right agreement (2017 to 2047), EDF CF has the right to build, own and operate the project in Haitang Bay, Hainan Province. The Project has been recognized as a low carbon energy utilization project in the tropical resort city of Sanya, China’s Hainan Province, to provide air-conditioning with reduced emissions for public facilities in the Haitang Bay area. The Project will have four (4) central energy stations, 30km of district cooling and heating distribution networks, and 38 end user stations by the end of 2023. Once fully implemented, the system will distribute cooling, heating and hot water to serve 4.7 million square meters of commercial space, including large scale hotels, shopping malls, entertainment parks and buildings, hospitals and other commercial complexes. The Project uses optimized multi-energy integration program to distribute cooling, heating and hot water to customers. The system will apply many advanced technologies, i.e. multi-level compressed high efficient refrigeration units, “ice battery” technology, hydro heat pump technology, distributed photovoltaic technology and AI data management to provide more efficient energy supply. The Project integrates advanced energy-saving technologies, such as ice storage, water-source heating pumping. It is expected to save about 30,000 tons of standard coal and reduce about 100,000 tons of carbon dioxide, sulfur dioxide and nitrogen oxide emissions every year once fully implemented.

Construction of the first energy station and the 18,900m of pipeline for the integrated smart energy network (6,000m of pipeline laid through land reclamation bypassing a river) was completed and commenced commercial operation in September 2021. The first group of commercial customers includes the Sanya Edition Hotel, Fairmont Sanya Haitang Bay, and Westin Sanya Haitang Bay Resort. The Company has signed up ten (10) commercial customers in Haitang Bay as today. The first energy station can provide services to 350,052 square meters of cooling space.

The Meishan Project

The Meishan Project is a joint investment, construction and operation of an integrated district energy distribution project in the New Economic Development Zone of Meishan City, Sichuan Province (the “Meishan New Economic Development Zone”) to be operated by Meishan Hengtai Tianzhiyuan Energy Limited (“Meishan Hengtai”), a company which the Group holds an effective interest of 72%. The Meishan New Economic Development Zone, situated next to the central urban area of Meishan City, Sichuan Province, with a planned development area of 50.5 square kilometers, is to be the hub for manufacturers of drugs, supplements, medical equipment, and other medical related supplies. The year-round constant demand for steam is necessary to produce drugs that makes the Meishan New Economic Development Zone an ideal platform for integrated district energy distribution.

The project commenced trial operation in April 2021 and commercial operation officially in mid-May 2021 and has signed up seven (7) commercial customers with three (3) customers under service today. In addition, the Sichuan provincial government has approved the pipeline construction plan for the second phase of the integrated district energy distribution project in Meishan City which will commence construction in 2022.

The project is expected to significantly improve the district’s energy consumption efficiency and reduce local air pollution in line with state policy as more customers connect to the program.