BEWG is a controlling shareholder of BECE, with a stake of approximately 32.37%. The PPAs it has signed with BECE are therefore classified as continuing connected transactions for BECE, under the listing rules of the Hong Kong stock exchange. The two companies did not disclose the terms of the PPAs or the specifications of the relevant solar projects.
The PPAs — which have already gone into effect — will expire at the end of 2019. However,Hong Kong-listed BEWG and BECE will retain the option of potentially extending the agreements, up to within a month before they come to an end.
The electricity will be sold according to the unit price per kilowatt-hour set by the relevant governing authorities in each geographical location, and will not be sold at a lower rate than the PV-generated electricity that BECE already supplies to other third-party customers. All monthly payments will be settled in cash, according to a statement to the Hong Kong stock exchange.
BECE has capped the amount of revenue it will collect under the PPAs at 6.3 million yuan ($928,055) this year, 12.2 million yuan in 2018 and 11.9 million yuan in 2019. The group has set these caps based on the designed capacity of each distributed-generation PV array, in addition to the local electricity prices in each relevant jurisdiction and the estimated amount of electricity that each solar project will generate. BECE will also consider its future plans to install PV at BEWG’s water plants when it sets these annual revenue caps.
Under a framework agreement signed in May 2016, BEWG will continue to provide BECE with space to install solar panels on its rooftops, plant pools and other vacant spaces at its water facilities. BEWG’s subsidiaries build and operate sewage-treatment plants and desalination facilities in China, Malaysia and Singapore. Last year, BECE built its first pilot distributed-generation PV array at a sewage treatment plant that BEWG owns in China’s Hebei province.
In late April, BECE posted a net profit of HK$529.2 million ($67.8 million) in the 12 months to the end of December, from a profit of roughly HK$38.5 million in 2015. Revenue jumped to HK$2.9 billion in 2016, from HK$288.9 million a year earlier. Its EPC business accounted for about 77% of its total revenue, at HK$2,234 million.
The Hong Kong-listed renewables developer owned 945.88 MW of operational PV capacity at 26 locations throughout China at the end of December, up from just 510 MW by the end of June 2016. In January of this year, it started building a 200 MW solar project in central China’s Anhui province. The installation will likely cost about 1.4 billion yuan to complete.