AEC Converts an Internal Combustion Engine Generator to Run on Hydrogen.

LAS VEGAS -- Today, Alternate Energy Corp. (OTCBB:ARGY) (AEC) announced that it has completed the first phase of its back-up power product initiative by successfully converting an Internal Combustion Engine (ICE) generator to run on hydrogen.

Over the past several months, AEC has been focused on the building of demonstrable ICE and Fuel Cell generator sets, fueled by the Company's low-cost, on-demand hydrogen. These units will demonstrate to investors and potential customers AEC's hydrogen flexibility by efficiently supplying both a fuel cell and ICE.

The ICE test was conducted last week at AEC's head office in Burlington, Ontario, where the re-configured generator ran under load, exclusively on hydrogen.

"As we have powered Astris' alkaline fuel cell in Sept, 2003, we also had a requirement to produce a demonstration unit which fueled an ICE generator set running on our low cost, on-demand hydrogen. This 'proof-of-concept' unit will be used to demonstrate that our hydrogen can fuel IC engines as well - a market that represents a quicker time to revenue than the fuel cell. As a result of this timely conversion, our product demonstration schedule will be stepped up to the first few months of 2005," stated Blaine Froats, Chairman of AEC.

AEC does not intend to enter into the manufacturing of hydrogen-run IC engines, but rather to eventually commission an existing manufacturer to build a unit that meets AEC's technology design specifications. This ICE generator was converted purely for testing and demo purposes.

AEC is also expecting delivery of their first alkaline fuel cell this month from Astris Energi, which will also be converted to run on the Company's affordable hydrogen. This means that AEC will have two demonstration units available early in the new year, moving the Company much closer to fulfilling its previously announced marketing initiative to supply complete power unit sets to the back up power marketplace.

"... and now that we have a demonstrable ICE generator set in the making, we will be off to a great start in 2005." We at AEC have been quiet in making any announcements for the past number of months, as we were diligently putting a number of necessary business pieces in place. Now that much has been accomplished, we will be keeping our shareholders informed of the details of our progress going forward," commented Mr. Froats.

Visit AEC's new website at www.cleanwatts.com for more information.

About Alternate Energy Corporation

Alternate Energy Corporation (AEC) is energizing the hydrogen economy. AEC is the first company to provide a hydrogen device that has mass-deployment economics and provides small-scale, on-demand distributed generation of electricity. AEC's patent pending discovery in metallurgy permits a small-scale unit to generate hydrogen from water through a "green" process at a fraction of the fossil fuel kWh cost of energy. AEC believes its product can have a revolutionary impact on the energy industry. Additional information is also available at the company's website at www.cleanwatts.com

Statements herein express management's beliefs and expectations regarding future performance and are forward-looking and involve risks and uncertainties, including, but not limited to, the ability to negotiate outstanding prior debts of acquired companies; properly identify acquisition partners; adequately perform due diligence; manage and integrate acquired businesses; react to quarterly fluctuations in results; raise working capital and secure other financing; respond to competition and rapidly changing technology; deal with market and stock price fluctuations; and other risks. These risks are and will be detailed, from time to time, in AEC's Securities and Exchange Commission filings, including Form 10-KSB 10-QSB and 8-K. Actual results may differ materially from management's expectations.