Babcock Power & ThermoEnergy Join Forces To Develop Advanced Carbon Capture Power Plant.

Babcock Power and ThermoEnergy Sign Agreement to Pursue Development and Commercialization of the TIPS Technology

DANVERS, Mass. -- Babcock Power Inc. of Danvers, Massachusetts and ThermoEnergy Corporation ("ThermoEnergy") (OTCBB: TMEN), announce the signing of a Memorandum of Understanding as a prelude to the formation of a joint effort to commercialize the Company's zero air emission power plant design called ThermoEnergy Integrated Power System ("TIPS"). Based on pressurized oxy-fuel combustion technology, TIPS converts coal, natural gas, oil, and biomass into energy with near-zero air emissions. In addition, it captures carbon dioxide ("CO2") in a clean pressurized form ready for sequestration or beneficial reuse such as secondary and tertiary oil recovery.

"As an industry and market leader in environmental air pollution controls, combustion technology, steam generation and thermal processes for the power generation industry, Babcock Power is ideally positioned to commercialize this revolutionary process," stated James F. Wood, President and CEO of Babcock Power Inc. "Our long history and extensive expertise in designing and furnishing steam generators, combustion systems, and a wide variety of heat exchangers, including the application of in-house heat transfer and Computational Fluid Dynamics (CFD) modeling capabilities, and ThermoEnergy's commitment to the advancement of new technology, positions us together to play a significant role in the reduction of global greenhouse gases."

"The commitment from a company of the size and capabilities as Babcock Power marks a pivotal point in the development and commercialization of this important and timely new technology," said Dennis Cossey, Chairman and CEO of ThermoEnergy. "Achieving zero air emissions from fossil fuel power plants has long represented the ultimate goal within the energy industry and with Babcock Power joining the effort I am confident we are on the verge of realizing this goal," said Cossey.

"The simplicity and efficiency of the TIPS approach offers a reliable and cost effective design for carbon-capture, near-zero emission power plants," said Alex Fassbender, President of ThermoEnergy Power Systems, LLC. "With relatively few unit operations, TIPS enhances power plant reliability, while its process efficiency comes from recovering the latent heat of vaporization of produced and entrained water. Adding a second reheat to the steam cycle efficiency, coupled with a simple, low-energy process to recover pipeline quality CO2 gives TIPS a competitive edge over other conversion technologies," said Fassbender.

Babcock and ThermoEnergy engineers will begin work immediately to finalize the data needed to design, construct and operate a large-scale pilot plant at a host site.

Babcock Power Inc., (www.babcockpower.com) through its subsidiaries, is one of the world's leading suppliers of technology, equipment, and services to the power generation industry. Babcock Power subsidiary companies include; Vogt Power International (Louisville, KY), Thermal Engineering International (USA) Inc. (Santa Fe Springs, CA), Babcock Power Environmental, Riley Power Inc. and Babcock Power Services (Worcester, MA), Boiler Tube Company of America (Lyman, SC), and TEi Construction Services, Inc. (Duncan, SC).

ThermoEnergy Corporation is a diversified technologies company engaged in the worldwide commercialization of patented and/or proprietary municipal and industrial wastewater treatment and power generation technologies. The wastewater treatment technologies are consolidated in our subsidiary, CASTion Corporation ("CASTion"), a fast growing developer and manufacturer of innovative wastewater treatment and recovery systems to industrial and municipal clients. The systems are unique because they meet environmental regulations while providing a rapid return on investment by recovering and reusing expensive feedstock's, reducing contaminated wastewater discharge and reusing wastewater in process operations. CASTion's wastewater treatment systems have application in aerospace, food processing, metal finishing, refineries, manufacturing and municipal wastewater. We assemble and ship our waste water treatment products from our 20,000 square foot manufacturing facility in Worcester, Massachusetts. The power generation technologies are consolidated in our subsidiary, ThermoEnergy Power Systems, LLC ("TEPS"). The economic and environmental matrix of the Company's technologies represents a paradigm shift in these key infrastructure industries. The Company currently has offices in Little Rock, AR, Worcester, MA, Hudson, MA, and New York, NY, Jacksonville, FL and Baton Rouge, LA. Additional information on the Company and its technologies can be found on its website at (www.thermoenergy.com), or (www.castion.com) for wastewater treatment specific information.

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