Clenergen Corporation signs exclusive agreement to acquire an 18MW biomass power plant in India and to start generating renewable electricity

Online, June 22, 2010 (Newswire.com) - Clenergen India Private Limited has entered into an agreement to acquire an 18MW/h biomass power plant located 40 miles southeast of Chennai, India and related land and other assets. The plant was one of the first and largest to be built in India and was upgraded from 12MW/h to 18MW/h in 2008, with the installation of a new generator and HTC steam turbine engine. The plant site has its own substation and transmits electricity generated by the plant directly into the India national power grid. The completion of the acquisition is subject to bank approvals of the assumption by Clenergen of outstanding bank loans relating to the plant and the release of such loans by plant's current owner. It is anticipated that these approvals will be obtained within the near future. The purchase will be funded through local bank financing and a cash transfer at closing.

The plant sells the electricity it produces through short term power purchase agreements with direct end users at an average price of US $0.13-16 KW/h. Clenergen believes that, at such an average price, the plant will generate an estimated US $15 million in revenues per year, assuming a plant load factor of 80% is maintained. It is estimated that cash of surplus $3 million per annum will be generated at the projected load factor. The Company retains the option to encompass the short term power supply contracts under the 71MW/h power purchase agreement entered into with Power Trading Corporation of India. The plant converts wood chips and other forms of biomass into steam through a combustion steam process which is then used to power the plant's steam turbine engines. Biomass feedstock supply contracts are currently in place with local vendors. It is anticipated that a cost savings of up to 30% will be achieved from the use of Clenergen's own propriety biomass feedstock which the Company plans to implement over time, as its energy crop plantations production capacity grows. In addition, recovery of exhaust heat generated by the steam turbine can add as much as 2MW/e to the output of the Plant.

Commenting on the agreement, Tim Bowen, Chief Executive Officer of Clenergen Corporation, stated: "This is an important project for the Company, as it represents the start of the commercialization of the significant research and development Clenergen has taken to date. Our initial focus in India is to acquire existing biomass power plants as they give an immediate source of revenue and cash generation, which will be used to fund Clenergen's operations and the commencement of full scale commercial energy crop plantations. Trials are underway evaluating our own propriety biomass feedstock species and aim to significantly enhance the profitability of biomass power generation, by using our own feedstock in due course. The Company has an excellent management team in place in India and we expect to reach consistent and optimum generating capacity from when we complete the acquisition of this plant."

Mr.Nandhagopal, Chairman of Nandha Energy Limited, the former owner of the plant, stated: "Over the past six months, we have come to understand and appreciate the business direction Clenergen has chosen to produce renewable energy. The cultivation of energy crops offers a cost effective alternative and provides guaranteed supplies of feedstock for generating electricity. Our decision to sell the biomass power plant to Clenergen we see as being mutually beneficial in the long term".