Environmental Power Corporation's Microgy Subsidiary Executes Additional Agreements for Construction and Sale of Digester Project.

Business Editors

PORTSMOUTH, N.H.--(BUSINESS WIRE)--Jan. 16, 2004

Environmental Power Corporation (OTCBB: POWR), a leader in the renewable energy industry with proprietary technology to convert manure into electricity, announced that its subsidiary, Microgy Cogeneration Systems, Inc. ("Microgy"), had executed agreements with an entity owned by Five Star Dairy, LLC of Elk Mound, Wisconsin ("Five Star"), pursuant to which Five Star will purchase digester systems based on Microgy's proprietary, highly efficient anaerobic digestion technology, proven at more than 25 locations in Europe. The agreements with Five Star follow the signing last month of similar agreements with Wild Rose Dairy of LaFarge, Wisconsin, bringing to two the number of digester systems under agreement for purchase and long-term operation and maintenance services.

Like the Wild Rose project, the Five Star facility will fall under the umbrella of Microgy's relationship with Dairyland Power Cooperative ("Dairyland"), under which Microgy expects to construct approximately $60 million of projects in Dairyland's service territory. The Five Star digester system will use manure from Five Star's dairy operations to create and supply biogas to generators to be constructed by Microgy and owned by Dairyland. The Dairyland Board of Directors is expected to approve the Five Star project in the next few days, and Dairyland is expected to execute a biogas supply agreement with Five Star shortly thereafter. Microgy's agreement with Five Star also provides Microgy with the right to operate and maintain the digester for the duration of its operational life.

Andy Livingston, Microgy's President, stated, "The execution of this agreement with Five Star demonstrates the growing market appreciation for Microgy's technology. We are excited about working with this leader in the Wisconsin dairy industry and are confident that many more will follow in adopting our technology."

Kam Tejwani, Chief Executive Officer of Environmental Power, stated, "With the signing of the agreements with Five Star, we continue to build momentum in the commercialization of Microgy's technology in North America and the realization on our $152 million sales pipeline. We look forward to commencing construction of this project while continuing to identify opportunities to add to our sales pipeline."

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