Financing

BT model

Financing structure: The project owner pays 30% of capital, obtaining financing for 70% from the bank for 10 years. Ownership remains with the owner. After one-year of operation, the owner can sell the power station to a third party (or the roof owner) and sign an operation and maintenance contract.

The third party: The record from one-year's operation help provide accurate estimation of the financial return of the station, thus effectively reducing the risk of the purchaser. The owner can also enjoy tax concession.

SINOTECH: Making profits from selling the power station and providing service of operation and maintenance.

Owner self-built model

Financing structure: The project owner pays 30% of capital, obtaining bank financing for 70% for 10 years with the aid of SINOTECH. Ownership remains with the owner of the roof. The owner is responsible for repayment of the bank loan, and will possess full title to the power station after fully repaying the loan.

Roof owner: With only 30% of capital investment, the roof owner will acquire the power station as an asset. Money that would previously be used to pay off electricity bills is now spared to repay the bank loan. The benefit to the owner is that his expense is capitalized. When the bank loan is fully repaid after 15 years, the mortgage is released and the owner has full title to the power plant. Cost of the electricity from the plant other than the O&M expense is virtually zero. Risks to the owner of the roof is nil as the generating capacity of the plant is guaranteed. In addition, the owner could enjoy tax concession.

SINOTECH: Making profits as an EPC and from providing service of operation and maintenance.

Energy Contract Management Model

Financing structure: The project owner (SINOTECH) pays 30% of capital, with bank financing of 70% for 10 years. The roof owner doesn't need to pay for the project, and ownership of the power plant belongs to SINOTECH.

Roof owner: Paying the electricity bill to SINOTECH according to the energy saving quantity and a discounted 90% of the normal electricity price. The owner sells provides the roof, and in return saves a lot of spending on electricity bill. He also benefits from a good reputation for environment protection.

SINOTECH: Charging the roof owner for electricity and enjoying tax concession. These receipts, net of outgoing on O&M expenses and bank loan repayment, will be its free cash flow.

Merits: 25 years of stable revenue will provide an obvious return, especially after fully repaying the bank loan.

Demerits: Funding structure is far from ideal. It requires a large amount of capital funding at the early stage, although investment will be recouped gradually over the years. Capital pressure is on the high side at the early stage.

Leasing mode

Financing structure: The project owner (SINOTECH) pays 30% of capital, with bank financing of 70% for 10 years. The roof owner doesn't need to pay for the project. Ownership belongs to SINOTECH, who will lease the station to the roof owner and charge a fixed rent.

Roof owner: The owner provides the roof, pays a fixed rent to use electricity generated by the station. He can not only save a lot of electricity bill but also benefits from a good reputation for environment protection.

SINOTECH: Charging a fixed rent to pay off bank loan. The balance will be his income after deducting O&M cost.

Charging a fixed rent to pay off bank loan. The balance will be his income after deducting O&M cost.

Demerits: Funding structure is far from ideal. It requires a large amount of capital funding at the early stage, although investment will be recouped gradually over the years. Capital pressure is on the high side at the early stage. If the roof owner is willing to pay a certain deposit, it will effectively ease the capital pressure on SINOTECH. SINOTECH might consider charging a favorable rent in return.