Environmental Power Corporation Announces Third Quarter Financial Results; Company Reports Profitable Quarter.

Business/Technology Editors

PORTSMOUTH, N.H.--(BUSINESS WIRE)--Nov. 21, 2001

Environmental Power Corporation (OTCBB:POWR; EPC), a 20-year entrepreneurial energy company, today announced results of its financial performance for the third quarter ended September 30, 2001.

Power generation revenue for the three months ended September 30, 2001 totaled $13,914,475, a 6% increase over revenue of $13,079,296.00 reported for the three-month period ended September 30, 2000. The increase in revenue is primarily attributable to an improvement in power generation at its Scrubgrass Project, an 83 Mw (net) waste coal-fired electric generating facility located in Pennsylvania, as well as a 5% increase in the rate billed to Pennsylvania Electric Company ("PENELEC") pursuant to its 25-year power purchase agreement, which expires in 2018. Net income for the current three-month period was $922,030, or $.05 per diluted share, compared to net income of $903,168, or $.08 per diluted share, posted for the same three-month period in the previous year.

For the nine months ended September 30, 2001, the Company reported power generation revenue of $39,494,244, a decrease from revenue of $41,164,018 reported for the nine months ended September 30, 2000. The decrease in revenue is primarily attributable to the absence of revenues of approximately $3,687,000 from a settlement agreement with PENELEC and was offset in part by the aforementioned 5% increase in certain rates billed to PENELEC, improvements in the Scrubgrass capacity factor, and an increase in the revenue recorded as a result of the straight-line accounting treatment of certain revenues under the power purchase agreement. Net income for the nine-month period in 2001 was $1,692,496, or $.13 per diluted share, compared to $2,032,140, or $.18 per diluted share, achieved for the same period in 2000.

Joseph Cresci, Chairman and Chief Executive Officer of EPC, stated, "We are quite pleased that we are on course to continue our string of profitable years in our core power generation business. As such, management believes that it can invest its efforts in exploiting dynamic growth opportunities within our newly acquired subsidiary, Microgy Cogeneration Systems, Inc. With Microgy's exclusive North American license to develop renewable energy plants using a unique and proprietary technology, we plan to begin aggressively pursuing host sites to employ these technologies, which are designed to convert biomass type organic wastes and animal manure into clean, renewable sources of electricity and/or fuels."

Continuing, Cresci added, "There are farms across the country that hold the potential of fueling thousands of megawatts of electricity that can be developed with our technology, and, in the process, create an entirely new source of revenue generation for each farming enterprise. Based on the 15-year track record of the licensed technology in Europe, we expect Microgy can produce and market firm, peak, utility-grade power that can be shaped to customer demand in this country."

ABOUT ENVIRONMENTAL POWER CORPORATION

Environmental Power Corporation (OTCBB:POWR) is an energy company with consistent annual revenues in excess of $50 million, which is focused on environmentally sound power generation, including waste coal, biomass and distributed generation.

CAUTIONARY STATEMENT

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements. Certain statements contained in this press release such as statements concerning 2001 profitability, belief as to investing efforts in exploiting dynamic growth opportunities with Microgy, plans to begin aggressively pursuing host sites to employ technologies, potential electricity development and expectation as to production and marketing of power by Microgy and other statements contained herein regarding matters that are not historical facts are forward looking statements as such term is defined in the Act. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, uncertainties involving development stage companies, financing requirements and uncertainties, difficulties involved in executing on a business plan, technological uncertainties, risks relating to managing and integrating acquired businesses, volatile and unpredictable developments (including plant outages and repair requirements), the difficulty of estimating construction, development, repair and maintenance costs and timeframes, the uncertainties involved in estimating insurance and implied warranty recoveries, if any, the inability to predict the course or outcome of any negotiations with parties involved with EPC's or Microgy Cogeneration Systems, Inc.'s projects, uncertainties relating to general economic and industry conditions, the amount and rate of growth in expenses, uncertainties relating to government and regulatory policies, the legal environment, intellectual property issues, the competitive environment in which EPC and Microgy operate and other factors, including those described in the Company's filings with the Securities and Exchange Commission, including the section "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Certain Factors That May Impact Future Results" of EPC's Quarterly Report on Form 10-Q for the period ended September 30, 2001. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. EPC undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.