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Environmental Power Announces Key Dairy Partnerships in California; Capacity Expected to Meet Gas Purchase Pact With PG&E

Posted on: Monday, 13 November 2006, 09:00 CST

PORTSMOUTH, N.H., Nov. 13 /PRNewswire-FirstCall/ -- Environmental Power Corporation , a leader in the renewable biofuels industry, announced today that its Microgy, Inc. subsidiary has executed definitive lease and manure handling agreements with several California dairies for the development of renewable gas facilities. At full operation these facilities are expected to generate approximately 8000 mcf/day of RNG(TM), an amount sufficient to fulfill Microgy's saleable gas rights under the recently announced long term purchase contract with Pacific Gas & Electric (PG&E). RNG is Microgy's branded, renewable, pipeline quality methane product.

The dairies -- Bar 20 Partners, Maddox Dairy, Joseph Gallo Farms, Lancing, LLC, Hollandia Farms, Inc., and Cloverdale Dairy, LLC -- will host Microgy's owned and operated facilities capable of supplying an aggregate of over 2.5 billion cubic feet of RNG annually, or the equivalent natural gas needs of approximately 50,000 California residences, while concurrently capturing nearly one million metric tons annually of greenhouse gas emissions. As California has recently enacted mandates to reduce greenhouse gases, these carbon credits are expected to have significant value, as they would have an estimated annual value of over $3 million based on current prices for such credits on the Chicago Climate Exchange.

Rich Kessel, President and Chief Executive Officer of Environmental Power said, "Today's announcement firmly establishes our entry into California, the largest dairy market in the United States. We view our first mover status, proven and efficient technology and PG&E's commitment to purchase our RNG as further validation of our business model. We will continue to aggressively pursue additional manure supply and long-term gas purchase agreements in this largely untapped market." He continued, "The standardized, multi-tank gas production facilities that Microgy will install, own and operate in California will mirror the facilities currently in construction and development at four locations in Texas, and we intend to explore long-term, tax-exempt financing for the California facilities, similar to the financing we recently completed for the Texas facilities."

Stephen Maddox, Managing Partner of Maddox Dairy, said, "I'm excited to be part of an effort that promises economic opportunity and enhances environmental stewardship. I am proud to know that, in addition to providing milk products, my dairy operation will generate renewable energy to fuel California's businesses and homes."

Mike Gallo, CEO of Joseph Gallo Farms, added, "Our strategic partnership with Microgy allows us to diversify our revenue stream, enhance dairy operations and continue our strong commitment to the environment." The agreement announced today represents the second agreement between Microgy and Joseph Gallo Farms to develop multi-tank digester facilities on dairies owned by Joseph Gallo Farms in Atwater, CA. Microgy and Joseph Gallo Farms in July 2005 announced their first agreement for the construction of an anaerobic digester facility designed to supply RNG to offset propane use in Joseph Gallo Farms' cheese production facility.

John Shehadey of Bar 20 Partners, Ltd. stated, "Microgy came to us with a practical, business-oriented approach to environmentally-friendly manure management, and we welcome those sorts of proposals. It shows that profits and environmental concerns don't always have to be mutually exclusive if you use a little creativity and common sense in your approach."

"These strategic partnerships are very exciting and represent a milestone for Microgy," said Jeff Dasovich, Microgy's Senior Vice President based in California. "We believe that they represent the tip of the iceberg for Microgy's development and growth in California's vital dairy sector. One of our standard systems digests the manure from approximately 10,000 milking cows. There are about 1.6 million dairy cows in California's Central Valley. Our relationship with PG&E and the dairy agreements announced today highlight our market leadership position and provide a solid platform on which to grow Microgy's RNG asset base and bring tangible benefits to California's residents, its agricultural community, and the environment."

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 http://www.environmentalpower.com/.

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""proposed," 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/or the need to negotiate and execute definitive agreements for the construction and financing of projects, the sale of project output, the supply of substrate and other requirements and for other matters; financing and cash flow requirements and uncertainties; inexperience with the development of multi-digester projects; risks relating to fluctuations in the price of commodity fuels like natural gas, and our inexperience with managing such risks; 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 and the legal environment; uncertainties relating to the availability of tax credits, deductions, rebates and similar incentives; 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.

CONTACT Rich Kessel, President and CEO of Environmental Power Corporation (603) 431-1780 rkessel@environmentalpower.com Jeff Dasovich, Senior Vice President of Microgy, Inc. (415) 461-4860 jdasovich@microgy.com Public Relations Contact: John Abrashkin, Ricochet Public Relations (212) 679-3300 x121 jabrashkin@ricochetpr.com Investor Relations Contact: John Baldissera, BPC Financial Marketing 1-800-368-1217

Environmental Power Corporation

CONTACT: Rich Kessel, President and CEO of Environmental PowerCorporation, +1-603-431-1780, rkessel@environmentalpower.com; or JeffDasovich, Senior Vice President of Microgy, Inc., +1-415-461-4860,jdasovich@microgy.com; or Public Relations Contact - John Abrashkin ofRicochet Public Relations, +1-212-679-3300 x121, jabrashkin@ricochetpr.com; orInvestor Relations Contact - John Baldissera of BPC Financial Marketing,1-800-368-1217

Web site: http://www.environmentalpower.com/

Source: PRNewswire-FirstCall

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