ENERGY RESEARCH CORPORATION REPORTS RECORD FOURTH QUARTER AND ANNUAL RESULTS.

DANBURY, Conn.--(BUSINESS WIRE)--December 15, 1994--Energy Research Corporation (NASDAQ: ERCC) today reported that revenues for the fiscal year ended October 31, 1994 increased 35 percent to $30 million, compared with revenues of $22.2 million for the prior year. The Company reported net income of $220,000, or $0.06 per share, compared with $341,000 or $0.09 per share.

For the fourth quarter, revenues increased 85 percent to $10.3 million, compared with $5.6 million in the same quarter in the previous year. Net income was $37,000, or $0.01 per share, compared with $143,000, or $0.04 per share.

"This was the best year in the Company s history and we are obviously very pleased with our 1994 results. The increases in revenues from utility and government contracts in 1994 reflect continued progress and support for our commercialization activities. Both revenue and net income were in line with expectations based on the type of contracts the Company is now under, many of which are cost- sharing arrangements," said Dr. Bernard S. Baker, president and chief executive officer. "In addition, ERC achieved several important milestones during the past year that are the basis for expected major advances during 1995."

Significant developments in 1994 included:

- Santa Clara Demonstration Project begins construction: In April 1994, the Company began construction of its two- megawatt power plant in Santa Clara, California. The Company anticipates the Santa Clara Demonstration Project will begin operation during the summer of 1995. This project is the first commercial-scale field demonstration of ERC s Direct Fuel Cell technology and the world s largest carbonate fuel cell power plant.

- Completion of Direct Fuel Cell Stack verification tests: During spring and summer 1994, ERC successfully completed a series of stack tests, culminating in the operation of a full-height, 125 kilowatt unit. The tests achieved notable performance benchmarks including a 130 kilowatt electric power output, a record for a carbonate fuel cell stack.

- Manufacturing Productivity: Fuel Cell Manufacturing Corporation (FCMC), ERC s wholly owned manufacturing subsidiary, continued to increase staff, install new equipment and improve processes. FCMC is now a small- scale fuel cell manufacturing facility, capable of producing fuel cells to meet ERC s demonstration and R&D needs.

- Battery Breakthrough: In August, ERC announced that its battery division had achieved very significant improvements in the cycle-life of its nickel-zinc battery, increasing from 200 to 600 charge-discharge cycles. Based on these improvements, the Company continues to pursue partners to further develop this promising battery technology.

- Strategic Alliances: ERC recently signed a memorandum of understanding with Fluor Daniel, Inc. (FDI) to expand areas of cooperation in the commercialization of Direct Fuel Cell power plants. FDI is the principal subsidiary of Fluor Corporation, the largest publicly-owned engineering services firm in the U.S. In addition, the Company continues its collaborative relationship with the utility industry through the Fuel Cell Commercialization Group and the Santa Clara Demonstration Project.

- New Development Support: In 1994, ERC continued to bid aggressively for, and receive new contracts. The Department of Energy selected ERC for negotiation of a multimillion dollar, five-year program to advance fuel cells to the commercial marketplace. The Company was also awarded several smaller contracts and grants that provide additional funding to pursue advanced concepts in its fuel cells and batteries.

Energy Research Corporation, located in Danbury and Torrington, Connecticut, is an internationally recognized leader in the field of electrochemical technology for electric power generation and energy storage. ERC is developing its Direct Fuel Cells and batteries in cooperation with governmental, electric utility and major international commercial organizations.

RESULTS OF OPERATIONS

           (In thousands, except per share data)
                      (Unaudited)

                              THREE MONTHS ENDED OCTOBER 31,

                                     1994              1993

      Revenues                   $ 10,309          $  5,564

      Net income before income
         taxes                   $    114          $    231

      Net income                 $     37          $    143

      Earnings per share         $    .01          $    .04

      Weighted average common
        and common equivalent
          shares outstanding     3,946,987         3,900,662


TWELVE MONTHS ENDED OCTOBER 31,

                                      1994              1993

      Revenues                     $30,084           $22,211

      Net income before income
         taxes                     $   356           $   538

      Net income                   $   220           $   341

      Earnings per share           $   .06           $   .09

      Weighted average common
         and common equivalent
           shares outstanding    3,939,925         3,895,667


BALANCE SHEET
                       (In thousands)

                           ASSETS


                          October 31,            October 31,
                             1994                   1993


Current assets             $11,981                 $11,011

Property, plant &
 equipment, net              7,548                   7,902

Other assets                 2,766                   1,783

Total assets               $22,295                 $20,696


LIABILITIES AND STOCKHOLDERS' EQUITY

                          October 31,            October 31,
                            1994                   1993


Current liabilities        $ 4,578                 $ 2,700

Other long-term debt         5,883                   6,301

Other long-term liabilities    178                     289

Stockholders' equity        11,656                  11,406

Total liabilities and
 Stockholders' equity      $22,295                 $20,696

CONTACT: Energy Research Corp.

William Baker, 203/792-1460