Shenyang Power Group Signs Letter of Intent for Cooperative Development of Wind Power Generation Plant in Texas

SHENYANG, China, May 3, 2011 /PRNewswire-Asia-FirstCall/ -- A-Power Energy Generation Systems, Ltd. ("A-Power,"Nasdaq: APWR), a leading provider of distributed power generation systems in China and a manufacturer of wind turbines, today announced that Shenyang Power Group Company Ltd. ("Shenyang Power Group" or "SPG"), an industrial construction company in which A-Power owns a 19.5% interest, signed a letter of intent ("LOI") with China Machinery Engineering Corporation ("CMEC"), a major international engineering contractor, on April 15 involving the development of a proposed 615 megawatt wind power generation project in Texas ("Texas Wind Farm").

The aim of this planned arrangement between the parties is to assist SPG in securing from Chinese sources approximately 14% of the debt financing that is anticipated to be required to develop the project, as well as to find a suitable engineering, procurement, and construction ("EPC") contractor for the Texas Wind Farm.

The LOI calls for SPG to appoint CMEC as the EPC contractor for the Texas Wind Farm project and for CMEC to assist SPG in obtaining approximately US$260 million in debt financing from banks and other financing agencies in China for Spinning Star Energy LLC ("Spinning Star"), the project company that was founded to own, develop, and operate the Texas Wind Farm. As the EPC contractor, CMEC would be expected to procure equipment from suppliers designated by SPG.  

The parties expect to have further discussions and negotiations regarding the details of the arrangements covered by the LOI and to prepare and finalize the multiple agreements that will be required to create binding obligations between the parties during the course of May 2011.  Notwithstanding any efforts that are made by the parties pursuant to the LOI or any final agreements that may be reached pursuant to the LOI, no assurances can be made that SPG will be able to secure any debt financing for the Texas Wind Farm project.

SPG was incorporated in May 2009 in China as an industrial construction company specializing in electricity generation projects and manufacturing of power equipment.

A-Power initially had contributed 62% of SPG's registered capital of RMB 1.0 billion, with the remaining capital contributed by other non-related entities that are active in the electricity generation industry. In October 2010, A-Power sold 42.5% of its ownership in SPG, reducing A-Power's ownership in SPG from 62% to 19.5%.

Spinning Star is the joint venture enterprise owned by United States Renewable Energy Group Wind Partners I, LLC and SPG that was founded to develop and operate a wind power generation project of approximately 615 megawatts of capacity in west Texas. This wind project is currently under development and requires additional external financing for completion. The availability of the financing required to develop the Texas Wind Farm project is not assured.

About Shenyang Power Group

SPG is a venture, between the Shenyang municipal government and some industrial companies, that was founded in May 2009 to seek opportunities to develop large-scale power generation projects both in China and overseas. In December 2009, SPG acquired a 49% interest in Spinning Star. Subsequently, in January 2011, SPG assumed management control over Spinning Star pursuant to a negotiated agreement with its joint venture partner in the project company.

About China Machinery Engineering Corporation

China Machinery Engineering Corporation was restructured and renamed from "China National Machinery & Equipment Import and Export Corporation" on January 18, 2011. Established in 1978 as the first large national corporation integrating foreign trade with industry, CMEC is a large global conglomerate with engineering contracting as its core business. As a well-known international engineering contractor, CMEC has been listed among the largest 225 contractors in the world by Engineering News-Record for several consecutive years. For more information, please visit http://www.cmec.com.

About A-Power

A-Power Energy Generation Systems, Ltd. ("A-Power"), through its China-based operating subsidiaries, is a leading provider of distributed power generation systems in China and is expanding into the production of alternative power generation systems. Focusing on energy-efficient and environmentally friendly distributed power generation projects of 25 to 400 megawatts, A-Power also operates one of the largest wind turbine manufacturing facilities in China. A-Power acquired Evatech Co. Ltd., a designer and manufacturer of industrial equipment for amorphous-silicon photovoltaic panels, in January 2010, and acquired Hallys Corporation in May 2010.

In addition to the establishment of strategic relationships with some of the world's leading wind energy design and engineering companies, A-Power has formed joint research programs with Tsinghua University and the China Academy of Sciences to develop and commercialize other renewable energy technologies.

For more information, please visit http://www.apowerenergy.com.

Safe harbor statement

This news release may contain forward-looking statements. Any such statement is made within the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "anticipates," "believes," "expects," "estimates," "future," "intends," "may," "plans," "will," and other similar statements. Statements that are not historical facts, including statements relating to anticipated future earnings, margins, and other operating results, future growth, construction plans and anticipated capacities, production schedules and entry into expanded markets are forward-looking statements. Such forward-looking statements, based upon the current beliefs and expectations of our management, are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements, including but not limited to, the risk that: inclement weather conditions could adversely affect our operating results in particular quarters and or years; we may experience construction, manufacturing, and development delays on our projects which could adversely affect our financial condition and operating results; our limited operating history and recent entrance into new lines of business and jurisdictional markets may make it difficult for you to evaluate our business and future prospects; we may not be able to successfully develop our business in new jurisdictional markets, which would have a negative impact on the results of our operations derived from such new jurisdictional markets; our customers may not be able to obtain the financing required for these projects, and thus, we may not be able to derive revenues from such agreements, as well as other relevant risks detailed in our filings with the Securities and Exchange Commission, including those set forth in our annual report filed on Form 20-F for the year ended December 31, 2009. The information set forth herein should be read in light of such risks. We assume no obligation to update the information contained in this news release, except as required by law.

SOURCE A-Power Energy Generation Systems, Ltd.

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