Wind energy A-Power signs letter for development of wind power in Texas

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, 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 energy 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.