Shouhang High-tech Energy Technology Co., Ltd. (hereinafter referred to as "the company" or "Shouhang High-tech") received the "Letter of Concern for Shouhang High-tech Energy Technology Co., Ltd." (SME Board Concern Letter [2021] No. 114) (hereinafter referred to as "Letter of Concern") issued by the Management Department of Small and Medium-sized Board of Shenzhen Stock Exchange on March 4, 2021, the company's main business includes solar thermal power generation, energy storage business and waste heat power generation business."

The SME Board Management Department of the Shenzhen Stock Exchange expressed concern about this and asked the company to verify and make written explanations on the following matters:

First, according to your company's response to our department's concern letter (small and medium-sized board concern letter [2021] No. 65), your company in 2020 for 10MW molten salt tower type photothermal power station and related waste heat power generation projects, respectively, after the impairment of 0.357 billion yuan, 0.091 billion yuan, the net book value of the relevant assets is 0. Please add your company to explain the market competition of solar thermal power generation, energy storage business and waste heat power generation business, the company's position in the industry, its contribution to operating income and its proportion, the EIA of the projects involved in the above business, the environmental protection penalties received in the past three years, and the relevant risks are fully reminded in combination with the above-mentioned asset impairment.

Answer: 1. Solar thermal power generation is a clean energy that can avoid the current fluctuations and intermittency of photovoltaic and wind power. Since solar thermal power generation has its own energy storage system during the construction process and the back-end is directly generated by steam turbines, when the energy storage capacity reaches a certain scale, it can achieve 24-hour power generation and can operate flexibly at low load. To a certain extent, it can replace thermal power as the basic load or as the peak power supply of the energy base.

Due to the difficulty of system integration and large initial investment, there are not many domestic companies participating in the competition. The company's solar thermal power generation business is in a leading position in China. After several years of research and development and project operation, the company has accumulated more mature relevant experience and professional technology in the field of solar thermal power generation, and has made great breakthroughs and innovations on the basis of practical operation. At present, the company also has tower, trough, butterfly-type photothermal power generation technology, and related core equipment in addition to individual components, are independent research and development production. For example, the heat collection tower, mirror field and control system, molten salt storage equipment, special materials, reducer, air cooling system, etc. of the molten salt tower solar thermal power station are all developed, produced, installed and debugged by the company itself. At the same time, the company also has technical reserves and operation accumulation from photothermal power generation design, material development, equipment manufacturing and supply, EPC general contracting of photothermal power station to power station maintenance of the whole industrial chain. In Tianjin and Dunhuang, Gansu, the company has production and assembly workshops for photothermal power generation metal backplate stamping automatic production line, sub-mirror bonding curing and inspection production line, heliostat structure assembly and surface adjustment and inspection production line.

The company has obtained 49 patent certificates for technical achievements in solar thermal power generation and 6 copyrights in solar thermal power generation (excluding patents and copyrights that have been notified of acceptance). The company's 100MW solar thermal power generation project heat collection, heat storage energy, heat exchange system, concentrating system, production line detection technology, and heat-absorbing gas technology have all obtained the scientific and technological achievement appraisal report issued by the Renewable Energy Association, and won the China Renewable Energy Association Science and Technology Progress Award.

The company undertook the construction of the first 50MW trough-type photothermal power generation demonstration project in China invested by CGNPC, Sun Island EPC, the company invested and operated the Dunhuang 100MW photothermal power generation demonstration project, the company is currently under construction in Yumen 100MW molten salt tower photothermal power generation project. In addition, the company is also actively expanding overseas solar thermal power generation projects.

The company's Dunhuang 10MW project and Dunhuang Phase II 100MW project are separate mirror field and heat absorption tower projects, the two projects do not interfere with each other, independent accounting. According to the reply letter issued by the company on February 6, 2021, the company's 10MW molten salt tower solar thermal power generation project is a pilot solar thermal power generation project. The asset impairment of the 10MW project is mainly due to the failure to obtain the national solar thermal power generation demonstration electricity price at present. Therefore, the accrual does not affect the operation and benefits of Dunhuang Phase II 100MW molten salt tower solar thermal power generation project and Yumen 100MW solar thermal power generation project currently under construction, which have obtained the national demonstration electricity and are in the optimization commissioning.

The contribution of solar thermal power generation to operating income and its proportion: in 2019, the operating income of solar thermal power generation was 62,747,909.30 yuan, accounting for 8.43; in 2020, the operating income of solar thermal power generation was 125,974,539.93 yuan, accounting for 29.10 (the amount was not audited, and the final audit data shall prevail).

The Dunhuang 10MW and 100MW solar thermal power generation projects have obtained the "Construction Project Environmental Impact Report Form" issued by the Environmental Protection Department of Gansu Province and the Jiuquan Environmental Protection Bureau of Gansu Province, respectively, and the projects meet the environmental protection requirements. There have been no environmental penalties for the past three years.

Due to the complexity of system integration and the characteristics of large initial investment in the solar thermal power generation project, there may be a risk that the power station cannot meet the design parameters and thus affect the efficiency of the power station, and there is a risk of not obtaining sufficient funds to invest in the construction of the new power station, so please pay attention to the relevant risks.

2, the first aviation high-tech in energy storage and auxiliary peak service technology, mainly based on the company's own technical reserves and customer resources to actively carry out related business. According to the requirements of the Energy Administration for the construction of the first batch of national photothermal power generation projects (requiring more than 4 hours of heat storage), the photothermal power generation project built by Shouhang Gaoke is itself a new energy storage power station. At present, the domestic energy storage and power auxiliary service market is still in its infancy, and the future market space is very large. With the support of national policies, it is expected that the overall competitive environment will be good for a long time in the future.

At present, the company has formed technology and programs in this area, has completed a number of power plant technology promotion, according to the existing policy and user requirements for deep peak energy storage time to determine the program to promote the landing of the project. In addition, the company undertook the research and demonstration of key technologies for high-temperature molten salt concentrated power generation technology and heat storage peak shaving technology in Gansu Province in 2020 ". The project leader is Dr. Gao Feng, chairman of the board of supervisors and chief engineer of the company. The project is a major scientific and technological project in the industrial field of Gansu Province.

As the domestic energy storage and ancillary services market is still in its infancy, there are uncertain expectations of policy introduction in the future or the risk that the company's technology and cost competitiveness are not strong, so please pay attention to the majority of investors.

Energy storage business is currently in the promotion stage, there is no separate project order, no related operating income.

3, the company's waste heat power generation business is mainly concentrated in the natural gas pipeline pressure station industry, due to the characteristics of the industry and upstream natural gas pipeline enterprises contract signing, gas transmission and other factors, the current domestic competition of only a few companies. The natural gas industry is in line with the development direction of the national energy strategy, and the pipeline network construction and gas transmission capacity are still in the rapid development stage.

The company's waste heat power generation business is mainly constructed and operated through its subsidiary Xinjiang Xituo Energy Group Co., Ltd., which signed an agreement with PetroChina Pipeline United Western Branch and PetroChina Northwest United Pipeline Company. The company's business scope is: natural gas combustion compressor station waste heat power generation, the use of waste heat power station heat to the gas station heating, carbon emission data statistical accounting and third-party verification services, carbon trading process of third-party certification services, carbon emission reduction program consulting and services. At present, the power station has been built and operated well. However, due to the large investment in a single project, in the company's business focus to solar thermal power generation, energy storage, clean heating shift and the West-East Gas Pipeline pressurization mode changes, the company has decided not to build or suspend the construction of the uncompleted project, resulting in the impairment of assets of some projects.

Contribution of operating income from waste heat power generation and its percentage: operating income from waste heat power generation in 2019 was $29,146,691.09, or 3.92, and operating income in 2020 was $24,490,469.70, or 5.66 (the amount is unaudited and ultimately subject to audited data).

The projects currently operated and under construction by Xituo Energy Group Co., Ltd. have obtained the "Project Environmental Protection Acceptance Application Approval" issued by the Environmental Protection Bureau where the project is located, and the project meets the environmental protection requirements. There have been no environmental penalties for the past three years.

II. Please supplement your company's R & D investment, intangible assets, patented technology, core technical personnel and contribution to operating income in peak shaving energy storage auxiliary business, project name, contract signing time, counterparty, contract amount, performance progress and contribution to non-operating income of peak shaving energy storage auxiliary related projects, etc, and combined with the specific content of the relevant project to explain the judgment of its "carbon peak, carbon neutral" related business detailed reasons and rationality, whether there is a "hot spot" speculation of stock prices.

Reply:: First Airlines Gaoke has many years of technical reserves in peak-shaving energy storage auxiliary business. One of the technologies of Shouhang Gaoke in peak shaving energy storage auxiliary service is to apply photothermal power generation molten salt energy storage technology to deep peak shaving in combination with the existing system of generator sets. This technology has the advantages of large heat storage capacity, low cost, maturity and reliability, and long service life. The promotion of this technology can promote the consumption of new energy, reduce the time of abandoning light and wind, and improve the effective utilization hours of new energy. In addition, the combination of photovoltaic photothermal mentioned in the document of the National Energy Administration is also an important measure to use photothermal power generation to store energy, have low-load flexible adjustment capability, and can be used as a deep peaking power supply, which can effectively increase the large-scale grid connection of photovoltaic and wind power.

At present, the company has promoted energy storage technology with 6 power plants and 12 units, and the technology has been positively responded and recognized by users. Due to the novel technology and the long cycle of technical transformation demonstration, the project has not yet reached the implementation stage. Examples of some of the items discussed are as follows:

Serial Number	Name of negotiation project
1	A thermoelectric 2X330MW 1X350MW energy storage depth peaking project
2	A power plant 2X300MW energy storage depth peak project
3	A power plant 2X350MW energy storage depth peak project
4	A power plant 2X350MW energy storage depth peak project
5	A power plant 2X300MW energy storage depth peak project
6	A power plant 2X330MW energy storage depth peak project

The above projects have not yet signed a formal business contract, no revenue contribution. Investors are advised to pay attention to the relevant risks.

The leader and core technical personnel of the peak shaving energy storage project are Dr. Gao Feng, chairman of the board of supervisors and chief engineer of the company. For the development of energy storage peak shaving technology, the team undertook the research and demonstration of key technologies for high temperature molten salt concentrated power generation technology and heat storage peak shaving in Gansu Province in 2020. The research and development of this project uses molten salt heat storage peak shaving to provide auxiliary services for new energy consumption. The company has invested a total of 229.7043 million yuan in research and development of molten salt heat storage and heat exchanger research and development and test platform for molten salt energy storage and peak adjustment. At present, the company has applied for 8 related patents in molten salt heat storage and heat exchanger, and some core technologies have not applied for related patents due to technical confidentiality requirements.

At present, the first aviation high-tech energy storage depth peak adjustment auxiliary services are still in the development stage, the future may exist national support policies issued less than expected, or the company's project promotion can not be recognized by customers risk, please pay attention to the majority of investors.

Since its establishment, Shouhang Gaoke has been positioned in the innovative development of green energy. The company's main business, such as solar thermal power station and waste heat power station, are clean energy and energy-saving and environmental protection business. Taking Dunhuang Phase II 100MW Photothermal Power Station built by Shouhang High-tech as an example, after reaching the design value completely, it can reduce 350000 tons of carbon dioxide/year, and the environmental protection benefit is equivalent to planting 10000 mu of forest. The waste heat power station business of Shouhang Gaoke is to convert the waste heat resources discharged from the gas turbine of the compressor station into electric energy, reducing the actual energy consumption, not only reducing the thermal pollution of the exhaust gas waste heat to the atmosphere, but also using the exhaust gas waste heat for power generation, which is an effective measure to save energy and protect the environment, significantly improve the fuel utilization rate and reduce carbon dioxide emissions.

State Grid issued a "carbon peak, carbon neutral" action plan, clearly pointed out to enhance the power system peak capacity, expand the application of large-scale energy storage devices, improve the system regulation capacity.

Shouhang Gaoke has been taking "clean energy and energy conservation and environmental protection" as its enterprise development strategy. The main businesses such as photothermal power station and waste heat power station and the newly expanded peak-shaving energy storage business have certain business relevance with "carbon peak and carbon neutral. The company in the investor exchange platform, to respond to investors related questions, there is no "hot spot" speculation of stock prices.

3. Please explain the stock trading situation of your company's controlling shareholders, actual controllers, directors, supervisors and senior executives and their concerted actors in the three months prior to the date of this letter and the plan to increase and reduce their holdings in the next three months, whether there is any insider trading or market manipulation, and report the transaction details and self-examination report to our department.

Reply:After self-examination, the controlling shareholder, Jingjin Rongchuang Bellows (Tianjin) Co., Ltd., was held by CITIC Construction Investment Securities Co., Ltd. (hereinafter referred to as "CITIC Construction Investment") on December 14, 2020 for default disposal judicial auction, completing the passive reduction of 86,042,499 shares of the company.

On December 3, 2020, Mr. Huang Qingle, the actual controller and concerted action person, was subjected to judicial auction for default disposal by CITIC Construction Investment, completing the passive reduction of 11,822,000 shares of the company; on January 6, 7 and 8, 2021, he was passively reduced by CITIC Construction Investment to 6,034,002 shares of the company by means of centralized bidding.

The 118,665,687 shares of the Company held by Mr. Huang Wenjia, the actual controller and concerted action person, were auctioned by the Shanghai Financial Court on December 13, 2020.

After verification in China Securities Depository and Clearing Co., Ltd., it was learned that except for the above-mentioned personnel, no stock transactions occurred in other directors, supervisors and senior personnel of the company during this period. There is no insider trading or market manipulation. Upon inquiry, the company's controlling shareholders, actual controllers, directors, supervisors and their concerted actors have no active reduction plans in the next three months.

4. Please elaborate on the recent research conducted by the reception institutions and individual investors, and whether there are any violations of the principle of fair disclosure.

Reply:Recently, there are no on-site reception institutions and individual investment research, and the problems of investors on the interactive platform are publicly responded to and disclosed. There is no violation of the principle of fair disclosure.

V. Other matters that your company believes should be stated.

Reply:None.

It is hereby announced.

 

Shouhang Gaoke Energy Technology Co., Ltd.

Board of Directors

March 10, 2021