Smart Powerr Stock

Smart Powerr Corp. engages in the recycling energy business, providing energy savings and recycling products and services.

The company develops waste energy recycling projects for industrial applications in China. Its waste energy recycling projects allow customers, which use major amounts of electricity to recapture previously wasted pressure, heat, and gas from their manufacturing processes to generate electricity. The company offers waste energy recycling systems to companies for use in iron and steel, nonferrous metal, cement, coal and petrochemical plants. The company constructs its projects at its customer’s facility and the electricity produced is used on-site by the customer.

The company develops customized projects across various verticals to meet customer’s energy recovery needs. Its waste pressure-to-energy solution primarily consists of the Blast Furnace Top Gas Recovery Turbine Unit (TRT), a system that utilizes high pressure gas emitted from the blast furnace top to drive turbine units and generate electricity. The company’s waste heat-to-energy solution primarily consists of heat power generation projects for applications in cement, steel, coking coal, and nonferrous metal industries, which collect the residual heat from various manufacturing processes, e.g. the entrance and exit ends of the cement rotary kilns, to generate electricity. The company’s waste gas-to-energy solution primarily consists of the Waste Gas Power Generation system (WGPG) and the Combined Cycle Power Plant (the CCPP). A WGPG system utilizes flammable waste gas from coal mining, petroleum exploitation, refinery processing or other sources as a fuel source to generate electricity through the use of a gas turbine. A CCPP system employs approximately one power generating cycle to utilize the waste gas, which not only generates electricity by burning the flammable waste gas in a gas turbine (as a WGPG) but also uses the waste heat from burning the gas to make steam to generate additional electricity through a steam turbine.

The company provides a clean-technology solution aimed at reducing the air pollution and energy shortage problems in China. Its projects capture industrial waste energy to produce electricity, enabling industrial manufacturers to extend the life of primary manufacturing equipment. In addition, the company’s waste energy recycling projects allow its industrial customers to reduce their reliance on China’s centralized national power grid, which is prone to black-outs or brown-outs or is inaccessible from certain remote areas. Its projects produce lower carbon dioxide emissions and other pollutants.

The company has primarily used the Build-Operate-Transfer (BOT) model to serve its customers. For each project, the company designs, finances, constructs, and installs the waste energy recycling projects for its customers; operates the projects for five to 20 years; and then transfers the projects to the owners.

Projects

The company designs, finances, constructs, operates and eventually transfers waste energy recycling projects to meet the energy saving and recovery needs of its customers. Its waste energy recycling projects use the pressure, heat or gas, which is generated as a byproduct of various industrial processes, to create electricity. The residual energy from industrial processes, which was traditionally wasted, might be captured in a recovery process and utilized by its waste energy recycling projects to generate electricity burning additional fuel and additional emissions. Among various waste-to-energy technologies and solutions, the company primarily focuses on waste pressure to energy systems, waste heat to energy systems and waste gas power generation systems.

Waste Pressure to Energy Systems

TRT is a power generating system utilizing the exhaust pressure and heat from industrial processes in the iron, steel, petrochemical, chemical and non-ferrous metals industries, from blast furnace gases in the metal production industries. Without TRT power systems, blast furnace gas is treated by various de-pressurizing valves to decrease its pressure and temperature before the gas is transmitted to end users. No electricity is generated during the process and noise and heat pollution is released. In a TRT system, the blast furnace gas produced during the smelting process is directed through the system to decrease its pressure and temperature. The released pressure and heat is then utilized to drive the turbine unit to generate electricity, which is then transmitted back to the producer.

Waste Heat to Energy Systems

Waste heat to energy systems utilize waste heat generated in industrial production to generate electricity. The waste heat is trapped to heat a boiler to create steam and power a steam turbine. The company’s waste heat to energy systems have used waste heat from cement production and from metal production. It invested in and has built two cement low temperature heat power generation systems. These projects can use about 35% of the waste heat generated by the cement kiln and generate up to 50% of the electricity needed to operate the cement plant.

Waste Gas to Energy Systems

The company’s waste gas to energy systems primarily include Waste Gas Power Generation (WGPG) and Combined Cycle Power Plant (CCPP) systems. WGPG uses the flammable waste gases emitted from industrial production processes, such as blast furnace gas, coke furnace gas, and oil gas, to power gas-fired generators to create energy. A CCPP system employs approximately one power generating cycle to utilize the waste gas.

Shanghai TCH Energy Tech Co., Ltd. (Shanghai TCH) and its Subsidiaries

As of December 31, 2020, Erdos TCH Energy Saving Development Co., Ltd (Erdos TCH) leased power and steam generating systems from waste heat from metal refining to Erdos (a total of five systems) and charges Erdos a leasing fee based on actual electricity generated.

Erdos TCH – Joint Venture

In April 2009, the company formed Erdos TCH as a joint venture (the JV or Erdos TCH) with Erdos Metallurgy Co., Ltd. (Erdos) to recycle waste heat from Erdos’ metal refining plants to generate power and steam to be sold back to Erdos. The JV has a term of 20 years. Erdos TCH has two power generation systems in Phase I with a total of 18 MW power capacity, and three power generation systems in Phase II with a total of 27 MW power capacity.

Pucheng Biomass Power Generation Projects

In 2010, Xi’an TCH Energy Technology Company, Ltd. (Xi’an TCH) entered into a Biomass Power Generation (BMPG) Project Lease Agreement with PuchengXinHeng Yuan Biomass Power Generation Co., Ltd. (Pucheng), a limited liability company incorporated in China. Under this lease agreement, Xi’an TCH leased a set of 12MW BMPG systems to Pucheng for a term of 15 years. (Pucheng Phase I).

Shenqiu Yuneng Biomass Power Generation Projects

In 2011, Xi’an TCH entered into a letter of intent (LOI) with Shenqiu YuNeng Thermal Power Co., Ltd. (Shenqiu) to reconstruct and transform a Thermal Power Generation System owned by Shenqiu into a 75T/H BMPG System. In 2011, Xi’an TCH entered into a BMPG Asset Transfer Agreement with Shenqiu (the Shenqiu Transfer Agreement). Pursuant to the Shenqiu Transfer Agreement, Shenqiu sold Xi’an TCH a set of 12 MW BMPG systems (after Xi’an TCH converted the system for BMPG purposes). In 2011, Xi’an TCH and Shenqiu also entered into a BMPG Project Lease Agreement (the 2011 Shenqiu Lease). Under the 2011 Shenqiu Lease, Xi’an TCH agreed to lease a set of 12 MW BMPG systems to Shenqiu for 11 years. Upon expiration of the 2011 Shenqiu Lease, ownership of this system would transfer from Xi’an TCH to Shenqiu. In connection with the 2011 Shenqiu Lease, Shenqiu paid one month’s rent as a security deposit to Xi’an TCH, in addition to providing personal guarantees.

In 2012, Xi’an TCH entered into a Letter of Intent for technical reformation of Shenqiu Project Phase II with Shenqiu for technical reformation to enlarge the capacity of the Shenqiu Project Phase I (the Shenqiu Phase II Project). The technical reformation involved the construction of another 12 MW BMPG system. After the reformation, the generation capacity of the power plant increased to 24 MW. In 2013, Xi’an TCH and Shenqiu entered into a BMPG Project Lease Agreement (the 2013 Shenqiu Lease). Under the 2013 Shenqiu Lease, Xi’an TCH agreed to lease the second set of 12 MW BMPG systems to Shenqiu for 9.5 years. When the 2013 Shenqiu Lease expires, ownership of this system would transfer from Xi’an TCH to Shenqiu.

Yida Coke Oven Gas Power Generation Projects

In 2014, Xi’an TCH entered into an Asset Transfer Agreement (the Transfer Agreement) with Qitaihe City Boli Yida Coal Selection Co., Ltd. (Yida), a limited liability company incorporated in China. The Transfer Agreement provided for the sale to Xi’an TCH of a 15 MW coke oven WGPG station, which was converted from a 15 MW coal gangue power generation station from Yida.

On June 28, 2014, Xi’an TCH also entered into a Coke Oven Gas Power Generation Project Lease Agreement (the ‘Lease Agreement’) with Yida. Under the Lease Agreement, Xi’an TCH leased the Transfer Asset to Yida, and the term of the lease is from June 28, 2014 to June 27, 2029. Xi’an TCH will transfer the Transfer Asset back to Yida at the end of the lease term.

In 2016, Xi’an TCH entered into a Coal Oven Gas Power Generation Project Repurchase Agreement (the Repurchase Agreement) with Yida. Under the Repurchase Agreement, Xi’an TCH agreed to transfer to Yida all the project assets with Yida’s retention of ownership of the Shares. Under the Repurchase Agreement, ownership of the project assets was transferred from Xi’an TCH to Yida within 3 business days after Xi’an TCH received the full Transfer Price and the outstanding monthly leasing fees. In 2016, the company received the full payment of the Transfer Price and title to the system was transferred at that time.

Chengli Waste Heat Power Generation (WHPG) Projects

In 2013, Xi’an TCH formed a new company, ‘Xi’an Zhonghong New Energy Technology Co., Ltd.’ (Zhonghong). Zhonghong is engaged to provide energy saving solution and services, including constructing, selling and leasing energy saving systems and equipment to customers. In 2018, Shanghai TCH entered into a Share Transfer Agreement with Beijing Hongyuan Recycling Energy Investment Center, LLP (HYREF), pursuant to which HYREF agreed to transfer its 10% ownership in Xi’an Zhonghong to Shanghai TCH. The transfer was completed in January 2019.

In 2013, Zhonghong entered into a Cooperative Agreement of Coke Dry Quenching (CDQ) and CDQ WHPG Project with Boxing County Chengli Gas Supply Co., Ltd. (Chengli). The parties entered into a supplement agreement in July 2013. Pursuant to these agreements, Zhonghong agreed to design, build and maintain a 25 MW CDQ system and a CDQ WHPG system to supply power to Chengli, and Chengli agreed to pay energy saving fees (the Chengli Project).

In 2013, Zhonghong entered into an Engineering, Procurement and Construction (EPC) General Contractor Agreement for the Boxing County Chengli Gas Supply Co., Ltd. CDQ Power Generation Project (the Chengli Project) with Xi’an Huaxin New Energy Co., Ltd. (Huaxin). Zhonghong, as the owner of the Chengli Project, contracted EPC services for a CDQ system and a 25 MW CDQ WHPG system for Chengli to Huaxin. Huaxin should provide construction, equipment procurement, transportation, installation and adjustment, test run, construction engineering management and other necessary services to complete the Chengli Project and ensure the CDQ system and CDQ WHPG system for Chengli meet the inspection and acceptance requirements and work normally.

Tianyu WHPG Project

In 2013, Zhonghong entered into a Cooperative Agreement (the Tianyu Agreement) for Energy Management of CDQ and CDQ WHPG with Jiangsu Tianyu Energy and Chemical Group Co., Ltd (Tianyu). Pursuant to the Tianyu Agreement, Zhonghong would design, build, operate and maintain two sets of 25 MW CDQ and CDQ WHPG systems for two subsidiaries of Tianyu – Xuzhou Tian’an Chemical Co., Ltd. (Xuzhou Tian’an) and Xuzhou Huayu Coking Co., Ltd. (Xuzhou Huayu) – to be located at Xuzhou Tian’an and Xuzhou Huayu’s respective locations (the Tianyu Project).

In 2013, Xi’an Zhonghong New Energy Technology Co., Ltd. entered into an EPC General Contractor Agreement for the Xuzhou Tianyu Group CDQ Power Generation Project (the Project) with Xi’an Huaxin New Energy Co., Ltd. (Huaxin). Zhonghong as the owner of the Project contracted EPC for the two sets of CDQ and 25 MW CDQ WHPG systems for Tianyu to Huaxin -one for Xuzhou Tian’an and one for Xuzhou Huayu. Huaxin should provide construction, equipment procurement, transportation, installation and adjustment, test run, construction engineering management and other necessary works to complete the Project and ensure the CDQ and CDQ WHPG systems for Tianyu meet the inspection and acceptance requirements and work normally.

Zhongtai WHPG Energy Management Cooperative Agreement

In 2013, Xi’an TCH entered into a CDQ and WHPG Energy Management Cooperative Agreement (the Zhongtai Agreement) with Xuzhou Zhongtai Energy Technology Co., Ltd. (Zhongtai), a limited liability company incorporated in Jiangsu Province, China. Pursuant to the Zhongtai Agreement, Xi’an TCH would design, build and maintain a 150 ton per hour CDQ system and a 25 MW CDQ WHPG system (the Project), and sell the power to Zhongtai, and Xi’an TCH will also build a furnace to generate steam from the waste heat of the smoke pipeline and sell the steam to Zhongtai.

In 2016, Xi’an TCH entered into a Xuzhou Zhongtai CDQ and WHPG System Transfer Agreement (the Transfer Agreement) with Zhongtai and Xi’an Huaxin New Energy Co., Ltd., a limited liability company incorporated in China (the Contractor). The Transfer Agreement provides for the sale to Zhongtai of all the assets of the Project under construction from Xi’an TCH. Additionally, Xi’an TCH would transfer to Zhongtai the EPC Contract for the Project, which Xi’an TCH had entered into with the Contractor in connection with the Project.

Strategy

The company’s strategies include maintaining core verticals to improve market share in China; expanding to new business of energy storage with future high growth potentials; continually improving research and development efforts; and selectively acquiring waste-to-energy power plants.

Contractor and Equipment Suppliers

The company conducts its project construction through an EPC general contractor. The company has engaged Shaanxi Huaxin Energy Engineering Co., Ltd. for its projects under construction, and it also maintains relationships with various other general contractors in China, including Wuxi Guolian; CITIC Heavy Industries Co., Ltd.; and A-Power Energy Generation Systems, Ltd.

The company has business relationships with majority of the suppliers from whom its general contractors procure equipment, including Hangzhou Boiler Plant, Beijing Zhongdian Electric Machinery, Chengdu Engine Group, Shanghai Electric Group, China Aviation Gas Turbine Co. Ltd, and Xuji Electric.

Customers

The company’s customers are primarily mid- to large-size enterprises in China involving high energy-consuming businesses. The company’s targets include steel and nonferrous metal mills with approximately 3 million tons of production capacity per year, cement plants with approximately 2 million tons of production capacity per year that utilize new- suspension-line process, and coking plants with approximately 600 tons production capacity per year. Its existing customers operate in Shanxi province, Shaan’xi province, Shandong province, Jiangsu province and the Inner Mongolia Autonomic Region in China.

Marketing and Sales

The company markets and sells its projects nationwide through its direct sales force of two employees based in Xi’an, China. The company’s sales and marketing group works closely with its research and development and engineering departments to coordinate its project development activities, project launches and ongoing demand and supply planning. The company markets its projects directly to the industrial manufacturers who could utilize its energy recovery projects in their manufacturing processes, including steel, cement, nonferrous metal, coal and petrochemical industries.

The company also maintains relationships with municipal governments, which sponsor or subsidize potential customers that could utilize its projects.

History

The company was incorporated under the laws of the state of Colorado in 1980. It was formerly known as China Digital Wireless, Inc. and changed its name to China Recycling Energy Corporation in 2007. Further, the company changed its name to Smart Powerr Corp. in March 2022.