FuelCell Energy Completes Successful Demonstration of 'On-the-Fly' Dual Fuel Operation with Standard Propane.

DANBURY, Conn. -- Fuel Cell Power Plant's Ability to Rapidly Switch between Two Fuels Enhances Its Reliability in Power Applications for Homeland Security and Mission-Critical Facilities

FuelCell Energy, Inc. (NasdaqNM:FCEL), a leading manufacturer of ultra-clean electric power generation plants for commercial, industrial and government customers, today announced the successful demonstration of its stationary power plants' ability to switch rapidly between fuels, validating the systems' capacity to guard against fuel supply interruptions from natural disasters or security issues at mission-critical facilities.

Evaluated in conjunction with Concurrent Technologies Corporation (CTC), operators of the Department of Defense (DoD) Fuel Cell Test and Evaluation Center (FCTec) in Johnstown, Pa., the power plant continued to generate base load electricity on a secondary fuel supply (propane) when the loss of its primary fuel source (natural gas) was triggered during testing. This rapid fuel switch was successfully demonstrated more than 40 times during operations exceeding 3000 hours.

The R&D project is being sponsored by the federal government to demonstrate the "dual fuel" capability of Direct FuelCell(R) (DFC(R)) power plants. CTC is the primary contractor to the U.S. Army Corps of Engineers, involving its Engineer Research and Development Center's Construction Engineering Research Laboratory (ERDC-CERL). FuelCell Energy and CTC operated a sub-megawatt DFC power plant on HD-5 propane fuel at full load achieving an electrical efficiency of 46 percent. The Johnstown plant continues to operate, having accumulated a total of 3060 hours on propane and generated 425 Megawatt hours (MWh) of electricity as of June 28, 2006. The plant also operated 550 hours on natural gas --generating an additional 45 MWh.

"Successful dual fuel testing demonstrates DFC power plants can be a vital part of our nation's homeland security efforts by providing ultra-clean, firm base load power at mission-critical facilities," said Christopher R. Bentley, Executive Vice President of Government Research and Development Operations. "On-the-fly switching among fuel sources enhances the flexibility and value of our DFC products."

Propane, a readily available fuel that can easily be stored onsite, is used as a primary fuel in isolated or sensitive locations such as islands, remote sites, national parks, data centers, military bases, hotels, and hospitals, and, therefore, is an ideal backup fuel for DFC power plants. The DoD can enhance the energy reliability at its facilities around the world by using HD-5 propane in conjunction with FuelCell Energy's DFC power plants.

Rapid fuel switching from natural gas to propane and back again was achieved on more than 40 fuel swaps at various load levels while the plant was generating power. The fuel swap to backup propane occurs instantaneously when the system detects natural gas pressure dropping below a predetermined trigger point. Improved in-line fuel utilization measurement technology was also successfully tested, improving fuel flow control. This is important for propane operation since a rapid change in fuel composition occurs when filling the propane fuel tank. This technology played a key role in achieving the rapid validation of the instantaneous fuel switching.

"With increasing focus on establishing effective homeland security measures, the rapid fuel switching capability of FuelCell Energy's DFC products can provide enhanced on-site power generation options for facilities where reliable 24/7 power is essential," said Franklin H. Holcomb, CERL's Fuel Cell Team Project Leader. "Multiple fuel operation is part of the rapid evolution of fuel cells as a replacement for conventional electric power where high efficiency, increased reliability, reduced harmful emissions and lower noise levels are key requirements for installation."

Testing validated the DFC power plant is capable of continuous long-term high-load high-efficiency operation on propane, as well as instantaneous fuel switching from natural gas to propane in the event of loss of natural gas supply without loss of power. The unit can also switch back to natural gas from propane, instantaneously and on-load, once natural gas service is restored.

The project is supported by funding through DoD, the U.S. Army and ERDC-CERL.

About FuelCell Energy, Inc.

FuelCell Energy develops and markets ultra-clean power plants that generate electricity with higher efficiency than distributed generation plants of similar size and with virtually no air pollution. Fuel cells produce base load electricity giving commercial and industrial customers greater control over their power generation economics, reliability and emissions. Emerging state, federal and international regulations to reduce harmful greenhouse gas emissions consider fuel cell power plants in the same environmentally friendly category as wind and solar energy sources -- with the added advantages of running 24 hours a day and the capacity to be installed where wind turbines or solar panels often cannot. Headquartered in Danbury, Conn., FuelCell Energy services over 45 power plant sites around the globe that have generated more than 108 million kilowatt hours, and conducts R&D on next-generation fuel cell technologies to meet the world's ever-increasing demand for ultra-clean distributed energy. For more information on the company, its products and its worldwide commercial distribution alliances, please see www.fuelcellenergy.com.

Direct FuelCell, DFC and DFC/Turbine are registered trademarks of FuelCell Energy, Inc. All other trademarks are the property of their respective owners. The Company's sub-megawatt DFC fuel cell power plant is a collaborative effort combining its Direct FuelCell technology with a HotModule(R) balance of plant design from MTU CFC Solutions, GmbH.

This news release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the development and commercialization of its fuel cell technology. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, the risk that commercial field trials of the Company's products will not occur when anticipated, general risks associated with product development, manufacturing, changes in the utility regulatory environment, potential volatility of energy prices, rapid technological change, and competition, as well as other risks set forth in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.