Energy Research Licenses Nickel-Zinc Battery Technology for Electric Vehicles in Asia.

DANBURY, Conn.--(BUSINESS WIRE)--Feb. 24, 1998--

Agreement to Provide ERC with $5 Million License Fee,

Equity Position and Royalties

Energy Research Corporation (AMEX:ERC) today announced that it had signed a license agreement with two partners -- the Formosa Plastics Group of Taiwan and the City of Xiamen, People's Republic of China -- to license Energy Research Corporation's nickel-zinc battery technology for electric and hybrid electric vehicles.

Under terms of the agreement ERC is scheduled to receive a $5 million license fee, including a $1.5 million payment within the first 30 days, and the balance upon completion of certain conditions. In addition, ERC will receive a royalty on each nickel-zinc battery produced and sold. The license agreement also grants ERC an option to acquire an equity interest in the new joint venture battery company which will manufacture and sell the batteries in China, Taiwan and 10 other Southeast Asia countries.

This is the first nickel-zinc battery technology license ERC has issued for the automotive market. In January 1997, ERC signed a worldwide licensing agreement with Corning Inc. (NYSE: GLW) for all other applications of its nickel-zinc battery technology, such as consumer electronic products.

Interest in electric (EV) and hybrid electric vehicles (HEV) has grown substantially in the last year as auto manufactures seek to meet higher emissions standards established throughout the U.S. and around the world. The challenge lies in trying to meet those standards while providing acceptable performance at a cost-effective price.

General Motors (NYSE:GM), which introduced its EV-1 electric car for lease in California in 1997, has recently announced plans to use nickel-metal hydride batteries in the EV-1; the car originally utilized lead-acid batteries. Three months ago, Toyota (NASDAQ:TOYOY) introduced Prius, an HEV featuring nickel-metal hydride batteries and a small internal combustion engine, for sale in Japan. Ford (NYSE:F) and Chrysler (NYSE:C) have announced plans to test HEVs in 1998.

The ERC nickel-zinc battery has the potential to provide approximately twice the storage capacity and power delivery of lead-acid batteries, and is a major advance in providing environmentally friendly power for automobiles. Nickel-zinc batteries provide greater storage capacity and increased power allowing auto manufacturers to use smaller batteries, reduce weight, increase usable size, and improve the range, acceleration and handling of EV or HEV production models. In addition, nickel-zinc batteries are more cost-effective than nickel-metal hydride batteries. The ERC nickel-zinc battery requires less raw material, produces 30 percent higher voltage per cell, and zinc costs less than $1 per pound as compared to the metal hydrides used now at in excess of $10 per pound.

"This agreement represents a milestone in the commercialization of our Ni-Zn battery for the automotive industry," said Jerry Leitman, president of Energy Research Corp. "We believe that our battery has the potential to replace both lead-acid and nickel-metal hydride batteries in markets for electric and hybrid electric vehicles. With the know-how and resources of Formosa Plastics Group, combined with the industrial base of the City of Xiamen, we have strategic partners who are capable and committed to the success of this technology."

"We have long wanted to develop a hybrid electric vehicle, but obtaining high performance and cost-effective battery technology has been a difficult problem to solve. The ERC nickel-zinc technology appears to be the answer we had been looking for," said a representative from the Formosa Plastics Group. "We believe that the opportunities presented in this partnership between Formosa Plastics, Xiamen Chemical and Energy Research could bring significant change to the automotive market."

Mayor Hong Yongshi gave a speech at the signing of the agreement. He said "Xiamen as a model city in environmental protection will provide maximum support to the nickel-zinc battery technology development."

"The rapidly expanding industrial base of Xiamen City is very important," said Wang Rong, Vice Mayor of Science and Technology, Xiamen, "But we also have an obligation to our citizens to keep the city beautiful. We have many city fleet vehicles -- such as taxicabs and postal delivery vehicles -- which are for the benefit of everyone. Because we want to maintain the beauty of the city and we want to support the industries which establish operations here, we certainly plan to utilize the nickel-zinc battery powered electric vehicles in whatever appropriate applications exist in Xiamen."

The Formosa Plastics Group of Taiwan has 1996 sales of $10.9 billion dollars (US) from its 11 companies, and is the world's largest producer of polyvinyl chloride (PVC). The agreement will be implemented by the Nan Ya Plastics Corporation, the largest company in the group, accounting for $3.2 billion in sales in 1996. Various subsidiaries of Formosa Plastics Group are involved in battery and electric vehicle developments.

Xiamen, with a population of 1.2 million, is located on the southeastern coast of Fujian Province. The city is widely regarded as one of the cleanest and most beautiful in China and is one of four Special Economic Zones in China, with the right to manage its own economic affairs while providing significant investment advantages to help attract foreign business. The agreement will be implemented by Xiamen Chemical Co., whose battery facilities produce more than 3 million batteries annually in a wide array of sizes for diverse uses. Xiamen automobile factories produce approximately 30,000 vehicles annually, with greater capacity available.

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 storage. ERC is developing its Direct Fuel Cells and batteries through funding from and in cooperation with government, electric utility and major international industrial organizations.

This release contains forward-looking statements regarding the Company's expected performance, operational results and development efforts that are based on current expectations that involve a number of risks and uncertainties, and as a result of such risks and uncertainties such performance, results or developmental efforts may not be realized. These statements are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The factors that could cause actual results to differ materially include the following: interruption or cancellation of existing contracts or license agreements, and uncertainties associated with government budget processes; uncertainties associated with development projects; and as otherwise described in the Company's 10-K's, 10-Q's and other fillings with the Securities and Exchange Commission.

CONTACT: Energy Research Corp.

Peter R. Voyentzie

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