ZBB Energy launches China energy management JV

Renewable energy power platform maker ZBB Energy Corporation (NYSE Amex: ZBB) entered into agreements to open a joint venture (JV) company in China, including a new manufacturing center in WuHu City.

August 31, 2011 – Marketwire — Renewable energy power platform maker ZBB Energy Corporation (NYSE Amex: ZBB) entered into agreements to open a joint venture (JV) company in China, including a new manufacturing center in WuHu City.

Partners include ZBB PowerSav Holdings Limited, AnHui Xinlong Electrical Company (Xinlong Electrical) and WuHu Huarui Power Transmission & Transformation Engineering Company (WuHu Huarui). A name for the joint venture is pending registration in China.

The JV will assemble and eventually manufacture ZBB power management products, on an exclusive basis in mainland China and on a non-exclusive basis in Hong Kong and Taiwan. The JV will construct a state-of-the-art manufacturing center in WuHu City, Anhui Province, slated to open in early 2012.

ZBB and PowerSav have worked on a China market JV plan since November 2010, screening more than 75 potential joint venture partners and 25 cities and governments. Xinlong Electrical and WuHu Huarui met the established new energy JV criteria. WuHu provided a host of incentives to locate in their city.

China is an emerging market for new energy and power management that offer significant growth opportunities, said Eric Apfelbach, CEO of ZBB Energy, adding that the JV will allow ZBB ENergy to bring its flow battery and power electronics products to China’s grid companies.

Key terms of the joint venture include cash and technology capital investments of approximately $13.4 million. ZBB’s capital contributions to the joint venture will be a contribution of technology to the China JV Company via a license agreement valued at approximately $4.0 million. ZBB’s indirect equity interest in the China JV Company will equal approximately 33%. ZBB will maintain control over the joint venture through its Board of Directors positions.

The China JV Company will have an exclusive, royalty-free license to manufacture and sell ZBB’s ZESS Zinc Bromide flow battery, version three (V3) battery (50kW) and ZESS POWR PECC (up to 250kW) in mainland China and a non-exclusive royalty-free license to manufacture and distribute the products in Hong Kong and Taiwan in the power management industry.

Additionally, ZBB and the China JV Company will enter into supply agreements under which the China JV Company will purchase certain manufactured products from ZBB and ZBB may purchase certain manufactured products from the China JV Company.

Pursuant to a Management Services Agreement, ZBB PowerSav Holdings will provide certain management services to the China JV Company in exchange for a management services fee equal to five percent of net sales for the first five years and three percent of net sales for the subsequent three years.

Pursuant to a Research and Development Agreement, the China JV Company may request ZBB to provide research and development services upon commercially reasonable terms and conditions. The China JV Company would pay ZBB’s fully loaded costs and expenses incurred in providing such services.

The joint venture will be established upon governmental approvals from China, which could be received in November 2011, the companies estimate.

ZBB Energy Corporation (NYSE Amex: ZBB) provides advanced electrical power management platforms targeted at the growing global need for distributed renewable energy, energy efficiency, power quality, and grid modernization. For more information, visit www.zbbenergy.com.

Xinlong Electrical manufactures power transmission and transformer equipment, including high and low-voltage power electronics, automation and control systems and power quality and conditioning systems. Xinlong Electrical is publicly traded on the Shenzhen Stock Exchange. For more information, visit www.ah-xinlong.com.

Wuhu Huarui is a distinct leader in the design, engineering and deployment of UHV transmission systems. For more information, visit www.whhrsbd.com.

PowerSav Incorporated provides vital “new energy” solutions to the China market: LED lighting, advanced energy storage and energy management systems, and “Smart Grid” infrastructure. For more information, visit www.powersav.net.

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