SUNPOWER GROUP LTD.

SUNPOWER ANNOUNCES PLANS TO INVEST IN A BIOMASS COGENERATION PROJECT IN CITY OF PROVINCE

1. INTRODUCTION

1.1 The Board of Directors (the “Board”) of Sunpower Group Limited (“Sunpower” or the “Company” and together with its subsidiaries, the “Group”) wishes to announce that the Company plans to invest in a biomass cogeneration project in Tongshan , Xuzhou City of Jiangsu Province (“Tongshan Project”).

As one of the biggest cities in Jiangsu, Xuzhou City is in the centre of the Huaihai Economic Zone, one of the earliest economic development zones in China covering 20 cities in Shangdong, Jiangsu, Henan and provinces, with a population of over 100 million. The Tongshan Project is located in Tongshan District of Xuzhou City. With a total area of 2,010 square kilometers and a population of 1.3 million people, Tongshan District is ranked 29th among China’s municipal districts in terms of overall comprehensive strength and ranked 28th place among China’s "Top 100 Districts" for investment potential in 2018. The Tongshan Economic Development Zone has been approved as a provincial-level development zone.1

Upon completion, the biomass cogeneration plant will supply civil heating to homes in Tongshan District as well as supply electricity to the State Grid.

The approved designed capacity of Tongshan project, to be constructed in phases, is 2 × 130 tons/hour (t/h) steam boilers and 2 × 35 megawatt (MW) electricity generators. Designed capacity for Phase 1 is 1 × 130 t/h steam boiler and 1 × 35 MW electricity generator.

1.2 The estimated investment for Phase 1 of Tongshan Project is approximately RMB420 million. Tongshan Project will be developed under a joint venture, of which Sunpower owns an 85% stake. The Group will fund the investment with net proceeds from the Tranche 2 Convertible Bonds, internal resources and bank borrowings.

2. RATIONALE FOR THE INVESTMENT

2.1 Continued execution of Sunpower’s strategy to build a sizeable GI portfolio that generates long-term, high-quality, recurring income and cashflows

The development of Tongshan Project is in line with Sunpower's key business development strategy to grow its GI project portfolio, the primary value creator and growth driver that has enhanced the company into one that generates long-term, high-quality, recurring income and cashflows.

When completed, Tongshan Project will effectively alleviate environmental pollution and simultaneously recycle local agricultural waste, realise energy conservation and emission reduction, and provide pollution-free civil heating for Tongshan District.

1 Source: http://www.zgts.gov.cn/zjts/tsgl/2018/07/03110236437.html 1

2.2 Tongshan Project will supply heating in addition to the biomass electricity generation, which is fully aligned with China’s national development policies

According to the Guideline to Boost the Development of Biomass Heating (关于促进生物质能供热 发展的指导意见) issued by the National Energy Administration and the National Development and Reform Commission in 2017, the biomass heating is one of the key solutions incombating air pollution and local government should accelerate the application of biomass in providing civil heating and industrial steam2.

In addition, the Central Committee of the Communist Party of China issued a document in 2019, titled "Various Opinions of the Central Committee of the CPC on Prioritising Agriculture and Rural Development and Sound Management of Matters Pertaining to Agriculture, Countryside and Farmers" (中共中央国务院关于坚持农业农村优先发展，做好“三农”工作的若干意见), where support was asserted for strengthening pollution control in rural areas, protection of the ecological environment, development of agriculture based on the concept of circular ecology and the promotion of resource recycling of agricultural waste such as livestock manure and straw3.

As a biomass congernation project, the Tongshan Project will supply clean heating to the local residents in addition to the sales of electrity to the State Grid, which differentiates it from a pure biomass power plant. This is fully aligned with the national development policies such as the aforementioned.

Moreover, the Tongshan Project will help the local govermment to address people’s livehood issues and allievate the cost of heating subsidies, as the cost of biomass-generated heating is relatively lower compared to other fuels such as natural gas. As such, the Tongshan Project is expected to gain more support from the local government that will be beneficial to its future development.

2.3 Grant of 30-year concession right by the local government

Tongshan Project has been granted an exclusive concession right to supply heating by the Tongshan District Government, effectively delivering the Group a captive market for heating within a radius of 20 kilometers of the Tongshan Project.

2.4 Ready resilient customer base in the concession area

Xuzhou City currently has substantial needs for residential heating and there is immediate demand from a large number of residential communities within Tongshan District. This creates a strong ready-made customer base that will ensure immediate customer subscriptions, providing immediate revenue flows for the Project upon the completion of construction.

2.5 Abundant agricultural cultivation in Tongshan District meets project demand for biomass fuel

Tongshan District is a national base for large-scale cultivation of grain commodities such as wheat, rice, taro, soybeans, peanuts and cotton. These resources, together with local agricultural straw and agricultural product processing waste, will provide abundant biomass that can be used as fuel for Tongshan Project. According to official statistics, the local biomass resources are abundant and can meet the biomass demand of the Tongshan Project.

3. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

2 http://zfxxgk.nea.gov.cn/auto87/201712/t20171228_3085.htm

3 http://www.gov.cn/zhengce/2019-02/19/content_5366917.htm 2

3.1 None of the Directors or controlling shareholders of the Company have any interest, directly or indirectly, in the aforementioned investment, other than through their respective shareholdings in the Company (if any).

4. FURTHER ANNOUNCEMENTS

4.1 The Company will make further announcement(s) in relation to the Tongshan Project as and when appropriate.

BY ORDER OF THE BOARD

Ma Ming Executive Director 20 February 2020

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