China Recycling Energy Corp.

Investor Presentation | Sept 2013

China Recycling Energy Corporation11Safe Harbor StatementThis presentation includes or incorporates by reference statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements include, but are not limited to, information or assumptions about revenues, gross profit, expenses, income, capital and other expenditures, financing plans, capital structure, cash flow, liquidity, managements plans, goals and objectives for future operations and growth. In some cases, you can identify forward-looking statements by the use of words such as may, could, expect, intend, plan, seek, anticipate, believe, estimate, predict, potential, continue, or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, levels of activity, performance, or achievements 22Company OverviewChina Recycling Energy Corporation (NASDAQ: CREG) builds, operates, and transfers (BOT) and provides leasing for energy recovery systems. Clients include large, energy intensive industrial plants in the steel, cement, metallurgy, and coal coking industries

3Symbol: CREGPrice: $1.82/share*52-week high/low : $3.50/$0.78Shares Outstanding: 50.224M*Market Cap: $91.41M*FY 2012 Net Income: $3.4M (Full Year)FY 2013 Net Income: $7.0M (6 months)Headquarters: Xian, ChinaAttorney: McKenna Long & Aldridge LLP Auditor: Goldman Kurland & Mohidin, LLP (GKM), an Independent Member of BDO Seidman Alliance

Blast Furnace Top Gas Recovery Turbine Unit (TRT)*As of market close 08/30/20133All of CREGs power systems recover previously wasted, cost free byproducts such as heat, pressure, steam, and other residuals generated during industrial production processes

Products & ServicesSupply power to customersPressure and heat released in production Generate power from exhaust pressure & heat4CREGs model creates a win-win situation for both the company and its clientsCREG provides the initial capex investment for the customer in exchange for a long-term production agreement with attractive returns on investmentThe customers can focus their capital resources on their core businesses while improving their energy efficiency and reducing emissions in compliance with government environmental regulations

4Products & ServicesSystemDescriptionApplicationMin. InvestmentTRTTop gas Recovery Turbine unit, a system that utilizes high pressured gas emitted from the steel blast furnace top to drive turbine units and generate electricitySteel plants$3.5MCHPG Cement Heat Power Generation, a system that collects the waste heat from the entrance and exit ends of cement rotary kilns to generate electricityCement plants$7MWGPGWaste Gas Power Generation, a system that utilizes flammable waste gas from coal mining, petroleum exploitation and refinery processing as a fuel source to generate electricityOil refinery plants and coal mining$10MCCPPCombined Cycle Power Plant, a system that generates electricity by burning the previously released gas generated during the iron-making process from blast furnaces. This can be achieved using either the boiler or CCPP turbine methodSteel plants and coking factories$25MBWPGBiomass Waste Power Generation, a new energy alternative that utilizes agriculture waste, such as straw, wood, and biogas, as fuel to generate powerAgriculture and forestry $15MCREG recovers energy in the form of pressure, heat and gas and converts it into electricity. The energy recovery systems can generally be classified into five categories:55Move picturesBlast Furnace Top Gas Recovery Units (TRT)Steel industry: China has the third largest steel industry in the world and grew at a 20% rate over the past 5 yearsEnergy potential: 38 kWh recovered per ton of steal produced; equivalent to $686M in electricity revenueRegulatory: the Chinese government is requiring all existing and new blast furnaces to install TRT systems; currently only ~50% are in complianceMarket size: over 200 TRT projects in China over the next 5 years

Cement Heat Power Generation (CHPG)Cement industry: China produces more than 45% of the worlds cement, with large scale plants (eligible for CHPG installation) producing more than 1.35 billion tons per yearEnergy potential: 38 kWh recovered per ton of cement producedRegulatory: the government requires that by 2010 40% of new, dry-type cement production plants must install CHPG systems (less than 10% have installed such systems)Market size: over 480 CHPG projects in China over the next 5 years

Market Outlook TRT and CHPG66Waste Gas Power Generation (WGPG)Coal coking industry: Chinas annual output is reaching 281 million tons; industry growth rate of 20% per annumEnergy potential: 80 kWh recovered per ton of steel produced; equivalent to $1.5B in electricity revenue (22.5 billion kWh)Market size: 300 furnace waste gas projects, 500 blast furnace waste heat projects, 100 glass furnaces furnace waste heat projects, 300 non-ferrous metal projects, 300 waste gas power generation projectsBiomass Waste Power Generation Agricultural waste burning industry: the National Development and Reform Commission (NRDC) expects the industry to rapidly expand as supportive policies, new technologies, and raw material collection infrastructure materializeUnder China's 12th Five-Year Plan from 2011 to 2015, energy efficiency and alternative energy technologies (including biomass fueled electricity) are top prioritiesEnergy potential: when sold to the state grid, recycled biomass waste has a preferential price of RMB 0.25 per kWh versus coal fueled power Regulatory: Straw power plants receive preferential tax treatment and subsidies

Market Outlook WGPG and BWPG77Coke Dry Quenching Power Generation (CDQ)The CDQ technology uses gas, instead of water, in an enclosed system to cool the heated coke. The heated gas is then recycled to generate electricity. Thus, CDQ system, as oppose to the Coke Wet Quenching system, has quickly been adapted in China in recent years due to its environmental friendliness. Coke Dry Quenching (CDQ) reuses waste heat, saves water and reduces pollutionMarket Outlook CDQ88Business ModelBOT Model: CREG finances and constructs the project, operates the project for 5-30 years, and then transfers the project to the customerEnables clients to focus on core business and avoid large capital expenditures while they improve their energy efficiency (5-20% savings) and meet regulatory standards

Build Operate Transfer Invest and build power plant at factory (3-6 months of construction)Facility is operated for the client for a period of 5-20 years; customers pays below market rates for all electricity needsPower plant is turned over to the client for no/a small fee at the end of the contract termLease Model: CREG finances and constructs a project, leases to the customer, and then sells/gives the project to the customer when the lease expiresInvestment Model: Both CREG and the customer finance and construct the project and share in the profits over 5-30 years (or indefinitely)

9Secure recurring revenuesOperational periods typically range from 5 to 30 yearsElectricity sales are secured by long-term electricity production agreements with customers; include built in guarantees of reaching minimum operational hours per yearInternal systematic approval process, including detailed due diligence, minimizes operational and collection riskFor private businesses, CREG requires mortgage, collateral, personal and third party guarantees and/or three months of payments upfront

Rapid payback (See Appendix A)Payback typically achieved within 3 to 4 yearsWeighted average unlevered IRR of 20%+ on current and under construction projects

Business Model101010Current CREG projects (See Appendix A)14 systems in operation: 3 TRT/BPRT project, 2 CHPG projects, 6 Heat Recovery/WGPG projects and 3 BWPG project are in operation (total capacity of 130 MW)2 heat recovery/WGPG & 3 CDQ projects are under construction (total capacity 102.5 MW)MOUs for six other TRT, CHPG, and WGPG projects (total capacity 279 MW)

Relationships with Chinese industrial giantsSino-Steel Group - Chinas largest nickel steel plantErdos Metallurgy Co. - the worlds largest ferrosilicon alloy plant Shengwei Cement Group - major Chinese cement producerChengli & Tianyu Coke Dry Quenching (CDQ) major coking plants

Business Growth111111Technology40+ engineers, 80% of whom have over 15 years of experienceSelf-owned Xingtai Iron & Steel design institute is capable of consulting, engineering and supervising responsibilities for TRT, waste heat, and waste gas power generation projectsTwo self-owned patents as well as six authorized-to-use patentsWill be applying for 10 patents stemming from Erdos WGPG projectCREG is cooperating with design institutes and companies in the steel, construction material, metallurgy, chemical, and petrochemical sectors to achiever better integration of power generation devices with the main projects12

1212Electricity generated by CREGs power systems is extremely low cost because there are no external fuel sources required

Beyond cost savings, CREGs systems allow customers to reduce their environmental footprint by mitigating reliance on fossil fuels (See Appendix A)Alternative Energy GenerationPower TypeCurrent Market ShareCapital Investment per kWPower Generation Cost per kWCREGs Waste Heat & Pressure Systems0.08%$600-1,070$0.0043-0.0100Thermal Power72.22%$640-1,140$0.0214-0.0271Hydroelectricity26.80%$860-1,430$0.0057-0.0129Nuclear Power0.70%$1,450-1,670$0.0229Solar Power0.08%$2,000-2,570$0.2857-0.4286Others0.10%$1,140-1,430$0.0170-0.0230Source: Industrial Associations Reports and CREGs Estimates1313CREG combines bank, design institute, EPC/turnkey provider, and project operator functionalities; there is no direct competitor who provides all these services in one package Future competition could arise if EPC or equipment providers acquire the financial platform to offer BOT services

Competition

TechnologyEntry BarriersExperienceTrack recordCapitalCustomerRelationshipsGovernment owned research institutesCREG offers a competitive alternative to TRT systems developed in-house and has little competition from other outsourcing optionsWGPG technology is relatively new to China, and there are few sizable factories capable of developing their own systems; most existing WGPG systems are small in scale141414Experienced ManagementMr. Ku Guohua Founder, CEO, and ChairmanMore than 20 years of experience in TRT technology, design, R&D, and project management Involved in the first set of TRT installation and operation in ChinaMr. David Chong CFOMore than two decades of experience in medium to large, private and publicly listed manufacturing companiesFamiliar with Chinese, Singaporean, American, European, and other capital marketsQualification from the Association of Chartered Certified Accountants (ACCA)Mr. Wu Zhigang Vice President, FinanceResponsible for the securities and financing activities of the CompanyOver 10 years experience at Guotai-Junan Securities and Zhongzheng Investment 151515GoalsImmediate to mid-term goalsImprove visibility in North America and EuropeInitiate large-scale total solutions projects that combine pressure, heat, and gas recovery projects at one siteStrengthen brand campaign Increase market share and shareholder valueFurther business development in new application areas of energy recycling

Longer term planExpand operations globallyPenetrate into new green energy product categoriesContinue to maximize the interests of shareholders161616Investment Highlights17Unique business model is key to market successThe only listed waste-energy recovery BOT pure-playNo direct competitors with a comparable combination of technical and financial resourcesOffers affordable and flexible financial solutions for reducing energy costs and emissions while extending the life of primary manufacturing equipment

Emerging sector in China with strong government supportTax incentives: 15% preferential corporate income tax (versus 25%); Energy Management Contract (EMC) qualifies the company for additional tax incentives Named a qualified Energy Saving Service Provider under the Chinese MOF & NDRC Joint GazetteStricter environmental regulations in key industries call for greater energy efficiencyRapidly growing Chinese economy requires significant industrial expansion, broadening the potential client base for CREG technology and service

171717Investment Highlights18Strong institutional investor supportHongyuan Huifu HY Recycling Energy Fund JV with CREGHongyuan is a unit under Central Huijin. Central Huijin manages investments mandated by the State Council of P R China. Phase 1 raised Rmb 460 millionCinda Asset Management Co., Ltd (owned by Chinese Ministry of Finance)Agreed to provide financing channels from affiliates, as well as first right of refusal to all Cinda portfolio companies with high project values

Long term sustainabilitySelf-owned R&D center as well as several partnerships with design and engineering institutionsDiversified business model and product line allow CREG to provide dynamic solutions to clients in rapidly changing economic, political and industrial environments

181818Financials: Balance Sheet19Jun 30, 2013$ 000 (unaudited)Dec 31, 2012$ 000AssetsCurrent AssetsCash And Cash Equivalents32,63145,004Short Term Investments in Leases10,78610,389Net Receivables6682Other Current Assets3,9475,147Total Current Assets 47,43060,622Long Term Investments in Leases143,028118,021Property Plant and Equipment6768Other Assets19,28823,586Total Assets 209,813202,297Accounts Payable2,1063,899Short/Current Long Term Debt60,42256,085Total Current Liabilities 62,52859,984Long Term Debt11,17115,803Other Liabilities841588Deferred Long Term Liability Charges7,9466,566Minority Interest4,376Total Liabilities 82,48687,317Common Stock5050Retained Earnings43,30737,107Capital Surplus61,45858,502Other Stockholder Equity22,51219,320Total Stockholder Equity 127,327114,979Net Tangible Assets 127,327114,9791919Financials: Operating Results20Fiscal YearFiscal YearFiscal YearFiscal YearFiscal YearHalf Year200820092010201120122013Sales of Systems8,048,956 38,286,835 74,280,703 30,106,354 -27,702,800Rental Income11,168,707 5,948,373 1,324,835 1,183,510 1,245,805550,334Total Revenue19,217,663 44,235,208 75,605,538 31,289,864 1,245,80528,253,134Cost of Sales14,001,736 33,601,015 57,033,984 23,013,807 -21,402,848Interest Income on Sales Type Leases12,258,582 7,052,574 15,136,643 22,104,162 18,234,0208,553,546Operating Expenses3,354,028 4,194,632 6,340,426 4,738,266 5,662,2121,766,560Non-operating Income (Expenses)(4,734,308)(483,992)134,222(1,820,852)(7,672,856)(2,631,584)Income before Tax(613,827)13,008,143 27,501,99323,821,1016,144,75711,005,688Add: Income from Discontinued Operations0 0 0 0 Less: Tax1,632,754 2,946,387 6,866,040 4,232,945 2,922,2533,726,870Less: Non controlling interest83 352,480 1,793,472 948,161 (184,491)247,284Net Income(2,246,664)9,709,276 18,842,48118,639,9953,406,9957,031,5341See Appendix B for explanation of sales-type lease accounting procedures

2020Financials: Future Lease Interest Income

21As of June 30, 2013, the future minimum rentals to be received on non-cancelable sales-type leases by years are as follows:

2014 $ 39,630,3072015 $ 31,985,2962016 $ 31,952,9272017$ 31,952,9272018 $ 31,952,927Thereafter $ 284,121,468Total $ 451,595,852Appendix A: Project InfoTypeProject NameStart DateProject LifeMWUnleveraged IRRPayback PeriodTRT Zhangzhi Iron & Steel Q2 2007139.048%3CHPG Shengwei Tongchuan Q4 200859.044%3CHPG Shengwei JinyangQ2 200959.041%3WGPG Erdos Phase I, Project 1Q4 20092018.022%5WGPG Erdos Phase I, Project 2Q1 2010209.022%6BWPG Pucheng BiomassQ2 20101512.022%6WGPG SinoSteel Binghai IQ3 201097.023%5WGPG Erdos Phase IIQ1 20112027.022%5BWPG Shenqiu Biomass IQ3 20111112.020%5BWPG Shenqiu Biomass IIQ1 20131112.020%5BPRT Datong Coal TongmeiQ2 2013206.021%5WGPG Datong Coal TongmeiUnder Construction2017.021%5WHPG Jilin FerroalloysUnder Construction2510.520%5CDQ Chengli CDQUnder Construction2025.020%5CDQ Tian yu CDQUnder ConstructionLong Term50.020%52222Appendix B: Notes on Sales-Type LeaseNotes on sales-type lease accountingDuring construction expenses incurred are capitalized as construction in progressUpon completion of construction, a one-time sale is recorded with approximately 30% marginDuring the LeaseAn investment in a sales-type lease is recorded as the sum of the total minimum lease payments receivable less unearned interest incomeInterest income is recognized from the recurring cash lease payments over the course of the lease term at a constant periodic rateContingent rental income is recognized when the actual electricity usage is in excess of the minimum lease payments)All cash flow of the Company is reflected in the lease payments and contingent income as they are realized by the CompanyWhen the lease expires the project is sold to the customer either at no charge or for a nominal fee2323