China Recycling Energy Corp a fast-growing industrial waste to energy solutions provider in China announced that it has delivered to Shenmu County Jiujiang Trading Co Ltd a set of 18 megawatt capacity power generating systems pursuant to a Cooperative Contract on Coke oven Gas Power Generation Project and a Gas Supply Contract for Coke oven Gas Power Generation Project.

The 10 year Contracts provide that the Company will recycle waste gas from Shenmu 600,000 tonnes per year coke production line to generate power, which will then be sold back to Shenmu for use in production. Shenmu agrees to supply the coke-oven gas free of charge. Power generation and delivery of power begin in October 2009.

The released said under the Contracts, Shenmu will pay to the Company energy saving service fees of approximately USD 473,000 per month for the life of the Contracts as well as such additional amount as may result from the supply of power to Shenmu in excess of 10.80 million kilowatt hours per month at the rate of CNY.30 per kilowatt hour. The Company will subcontract a third party operator at a cost of approximately USD 438,000 per year.

The Company expects to treat the Contracts as a sale-type lease. Based on the accounting model CREG applies regarding sale type leasing under US GAAP, the Company expects to recognize approximately USD 18.3 million in revenue at September 30, 2009 with a related cost of goods sold of USD 14.1 million. After the inception of the lease, CREG anticipates that it will recognize a total amount of USD 38.4 million as interest income from this sale-type lease over the 10 year term, on a monthly accumulative basis as it receives the monthly installment payments from Shenmu.

The Company maintains the ownership of the project throughout the term of the Contracts, including the already completed investment, design, equipment, construction and installation as well as the operation and maintenance of the project. CREG agrees to pay to Shenmu CNY 50,000 a year to use the land for the power station. At the end of the 10 year term, ownership of the systems transfers to Shenmu at no additional charge.

Mr Guohua Ku CEO of CREG said "This is CREG first project in the coking industry, one of the most energy intensive sectors in China. This project is expected to reduce annual coal consumption by 52,000 tons, equivalent of 130,000 tonnes of CO2 emissions. We are excited about the substantial growth in our Company as we take on ever larger projects with waste gas-to-energy solution."