Environmental Power Corporation Renewable Energy Projects Positively Impacted by Energy Law; Enactment of the Federal Energy Law Provides Incentives for Alternative Energy

PORTSMOUTH, N.H.--(BUSINESS WIRE)--Aug. 9, 2005--Environmental Power Corporation (AMEX:EPG) president and chief executive officer Kam Tejwani applauded the August 8 signing of the federal energy bill, which includes provisions that Environmental Power believes underscore the importance of the alternative energy market. The new policy provides for $3.1 billion in tax incentives for renewable energies, a strong endorsement for clean domestic power.

"We expect that the new policy, the accompanying tax credits and related benefits should serve to further drive adoption of Environmental Power's renewable energy solutions. For example, the law provides a ten-year, $0.009/KWH tax credit for certain types of "open loop biomass" renewable power projects placed in service by the end of 2007. Also, the law provides a number of incentives designed to spur adoption of renewable energy projects, including, for example, accelerated depreciation provisions for gas gathering projects. We believe that projects based on our technology will qualify for some or all of these tax credits and other benefits. The economics of our projects, which we believe will be attractive even without government incentives, are expected to be further enhanced by these benefits," said Kam Tejwani. "As a first mover in the emerging market for profitable, renewable energy production, we welcome this initiative, which we believe will drive market interest in environmentally smart energy. Our goal is to offer a reliable long term, renewable source of energy that is cost-effective and has less price volatility than traditional resources. "

“We believe that this new law will empower renewable energy providers by establishing a marketplace competitive with traditional energy companies. We believe our anaerobic digester technology is among the most advanced in this sector and poised to become a standard in this emerging marketplace”

Environmental Power's principal operating subsidiary, Microgy, Inc., designs, constructs and operates anaerobic digesters that convert agricultural waste into biofuels. This process produces substantially more energy from a given quantity of animal and organic wastes than similar technologies built for commercial purposes in the United States. Microgy's first facility, in Elk Mound, WI, utilizes a proven Danish technology licensed exclusively to Microgy for deployment in North America. The system is projected to generate approximately 6.5 million kilowatt hours annually from the waste of about 800 milk cows, an output that is sufficient to supply approximately 600 homes. This is the first of several facilities that Microgy is building in the Mid-West. In addition, Microgy recently announced a project in California with Joseph Gallo Farms involving the direct sale of biogas for onsite use at a cheese processing facility.

In addition to producing renewable energy, anaerobic digesters can assist farmers facing environmental and regulatory compliance issues related to animal waste disposal. Microgy's system can help farmers reduce ground and surface water pollution and minimize odors while freeing land for increased herd sizes, which is expected to help lower farm operation and maintenance costs. Anaerobic digesters also produce residual byproducts, including compost, bedding materials and pollution management credits that can serve as additional sources of revenue.

"We believe that this new law will empower renewable energy providers by establishing a marketplace competitive with traditional energy companies. We believe our anaerobic digester technology is among the most advanced in this sector and poised to become a standard in this emerging marketplace," concluded Mr. Tejwani.

ABOUT ENVIRONMENTAL POWER CORPORATION

Environmental Power Corporation is a developer, owner and operator of renewable energy production facilities. Its principal operating subsidiary, Microgy, Inc., holds an exclusive license in North America for the development and deployment of a proprietary anaerobic digestion technology for the extraction of methane gas from animal wastes for its use to generate energy. For more information visit the Company's Web site at www.environmentalpower.com.

ABOUT MICROGY, INC.

Microgy holds an exclusive license in North America for the development and deployment of a proprietary anaerobic digestion technology, which transforms manure and food industry waste into methane-rich biogas that can be used to generate electricity or thermal energy, or refined to pipeline-grade methane for sale as a commodity. This technology also represents a potentially profitable solution for the nation's estimated 3,500 large animal feeding operations as they seek to comply with a growing number of proposed and adopted mandates developed by federal, state and local officials aimed at regulating the management of farm waste. Complying with these mandates places potentially significant cost and operational burdens on America's farmers, which Microgy's technology can help to address.

CAUTIONARY STATEMENT

The Private Securities Litigation Reform Act of 1995, referred to as the PSLRA, provides a "safe harbor" for forward-looking statements. Certain statements contained in this press release, such as statements concerning planned manure-to-energy systems, our sales pipeline, our backlog, our projected sales and financial performance, statements containing the words "may," "assumes," "forecasts," "positions," "predicts," "strategy," "will," "expects," "estimates," "anticipates," "believes," "projects," "intends," "plans," "budgets," "potential," "continue," "targets" and variations thereof, and other statements contained in this press release regarding matters that are not historical facts are forward-looking statements as such term is defined in the PSLRA. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: uncertainties involving development-stage companies, uncertainties regarding project financing, the lack of binding commitments and the need to negotiate and execute definitive agreements for the construction and financing of projects and for other matters, financing and cash flow requirements and uncertainties, difficulties involved in developing and executing a business plan, difficulties and uncertainties regarding acquisitions, technological uncertainties, including those relating to competing products and technologies, risks relating to managing and integrating acquired businesses, unpredictable developments, including plant outages and repair requirements, the difficulty of estimating construction, development, repair and maintenance costs and timeframes, the uncertainties involved in estimating insurance and implied warranty recoveries, if any, the inability to predict the course or outcome of any negotiations with parties involved with our projects, uncertainties relating to general economic and industry conditions, and the amount and rate of growth in expenses, uncertainties relating to government and regulatory policies, uncertainties relating to the availability of tax credits, deductions, rebates and similar incentives, the legal environment, intellectual property issues, the competitive environment in which Environmental Power Corporation and its subsidiaries operate and other factors, including those described in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, well as in other filings we make with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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