Ocean Power Corporation Issues Letter to Shareholders.

Business Editors

EL DORADO HILLS, Calif.--(BUSINESS WIRE)--Feb. 8, 2001

The following is a letter to the Shareholders of Ocean Power Corporation (OTC:PWRE):

             A Letter from the President and the Chairman
               of the Board of Ocean Power Corporation

      Dear Shareholder:

      We want to take this opportunity to provide our shareholders with
a progress report from Ocean Power and a commitment to provide you
with this update on a quarterly basis.
      As always we appreciate the great enthusiasm so many of our
shareholders have shown in learning what they can about the fields of
desalination, distributed power generation and renewable energy.
      We continue on our path to bring together a family of technologies
that will allow us to integrate modular water and power systems with a
goal of becoming a global distributed water and power company.
      Now, I would like to provide you with a brief update in the areas
that are both critical to the company and to our shareholders:

      Regulatory Compliance

      In mid-December 2000 we received long-awaited comments from the
Securities and Exchange Commission (SEC) on the revised Form 10 SB we
submitted to the Commission earlier in the year. As of today, we have
submitted our response to these comments and the amended Form 10 SB is
available on the web at www.sec.gov or www.freeedgar.com.
      The question we most often receive from a shareholder is, "How
long is it going to take before this process will be over and you can
get relisted on the stock exchange?"
      The only answer to this question is that we cannot predict or
control how long this process will take, we can only assure our
shareholders that it is one of our highest priorities, and we are
making our very best effort to satisfy the SEC's requirements and
bring this process to a successful conclusion. We have engaged Latham
& Watkins, an experienced law firm, to assist us in this effort and as
soon as the SEC is satisfied, Ocean Power can then seek to be listed
on a major trading exchange.
      On that note, I want to assure shareholders that the company is
filing all other necessary documents to meet the reporting
requirements of the SEC, such as Form 10, 8K and 10Q. Regarding the
exchange the company will seek to be listed on, the company is
weighing the merits of a NASDAQ or AMEX listing. Due to the growth of
our business activities in Europe, we are considering a listing on a
major European exchange as well.
      We encourage our shareholders and the public to visit our website
(www.pwre.com) for new updates and other information items. We are now
in the process of reconstructing the website to make it more useful to
the public and our shareholders. If you forward your email address to
us at [e-mail], we will be able to facilitate even better
communications. If you do not have access to the Internet, please call
our Investor Relations office at 212/618-1955, and we will be happy to
fax or mail posted news to you.

      Acquisitions, Licenses, Joint Ventures, Strategic Partnerships

      As can be seen from prior announcements, Sigma Elektroteknisk AS,
(www.sigma-el.com) our Stirling Engine subsidiary, is moving forward
on its commercialization plan. It has delivered its first test unit to
Statoil, (www.statoil.com) the Norwegian state oil company and has
started the first phase of its manufacturing development program with
Ricardo, Inc., (www.ricardo.com) the U.S. subsidiary of Ricardo, Ltd.
of the U.K., a leading developer of diesel and internal combustion
engines for the automotive industry. In addition to Sigma's activities
in the U.K., Holland and Germany, we have started to develop the
marketing relationships necessary to introduce the basic Sigma product
(a 3 kW electric/9kW thermal system designed for single-family homes)
to the U.S. market.
      Ocean Power has received and tested its first two monitoring units
from EEM of San Diego and Moscow. The units permit the real-time
monitoring of air and water quality, based on proprietary technology
developed from air and water monitoring by the Soviet/Russian space
program. The successful tests confirmed the basic performance of the
units and the next step will be to have the full range of real-time
gas and water sensors validated by an independent laboratory. Now that
the preliminary data is positive, the Company will develop a
definitive license agreement for the exclusive rights to this
technology for water and power applications outside of the former
Soviet Union. Our ultimate goal is to use this technology to monitor
air quality in the exhaust of the company's Stirling engines.
      Ocean power has signed a non-binding term sheet with Science
Applications International Corporation (SAIC) (www.saic.com) to
license, on a non-exclusive basis, their next generation solar
concentrator. This concentrator can be used with either Stirling
engines or Photovoltaic (PV) concentrators. The down payment for this
license will be an equity stake of 5% in a subsidiary company to be
set up by Ocean Power to develop the utility market in the U.S. and
Canada. In addition to SAIC's technology, Ocean Power will convey to
the new subsidiary the exclusive rights to all of its power generator
technology for use in the United States and Canada.
      On Dec. 20 2000, Ocean Power signed a non-binding MOU with Organic
Power of Oslo, Norway (www.opas.no) to acquire up to 50% of the common
stock of Organic Power for a combination of cash and restricted stock
in Ocean Power. The exact amounts will be determined as a result of
due diligence investigation. Ocean Power's primary interest in Organic
Power is their ability to convert municipal solid waste (MSW), biomass
and many other waste streams into useable heat. The elimination of
waste is a potential income stream in and of itself. The heat produced
by these processes adds a second income stream as well as being able
to drive Stirling engines to produce electricity. Many potential
customers are facing increasing waste problems as well as power and
water shortage.

      Fuel Cells

      In the course of negotiations with HyPerTec, Ocean Power concluded
that the optimal business arrangement was to make HyPerTec a
wholly-owned subsidiary. HyPerTec has agreed to this arrangement. The
company will pursue the commercialization of Ocean Power's low-power,
Proton Exchange Membrane (PEM) fuel cell technologies. HyPerTec will
focus on passive, ambient-pressure systems for long-term power
supplies for the military and commercial markets.
      In addition to the PEM activities, Ocean Power has finished its
first two lab facilities in El Dorado Hills for the development and
testing of low-temperature hydrogen generators and high-performance
alkaline fuel cells. Under the leadership of Dr. Robert Zhao, director
of Fuel Cell Technology, these components and subsystems will be
developed to support the goal of making fuel cell systems with
electrical efficiency higher than 60 percent.

      Water

      The Company is working with its regional partners in Greece,
Mexico and the Caribbean to select at least two sites in each region
for installation of H2OkW systems as revenue producing pilot plants in
2001.
      In addition the Company is preparing bids for systems in two
additional regions, while simultaneously assessing the best regional
affiliation for each.
      All of the initial H2OkW projects are anticipated to employ the
high-efficiency SeaWater Reverse Osmosis (SWRO) technology to be built
for the Company by Malta Desalination Services, Ltd.
      A new business relationship is being developed with Water Services
Corporation, Ltd. of Malta. This venture is intended to lead to a new
subsidiary, Ocean Power Malta, which will manufacture, install and
maintain SWRO subsystems for use in the Company's H2OkW installations.
      Ocean Power is negotiating with both Aquamax/Keeran and Hadwaco Oy
to develop a joint venture company (controlled by Ocean Power), that
will own all intellectual property rights pertaining to distillation
technology, of all three companies. It will also acquire the
manufacturing facilities and selected staff of Hadwaco as well as its
commercial business in the area of water remediation. This development
will bring a secure manufacturing base for proprietary plastic heat
exchangers as well as extensive system engineering skills that will be
applied to the Company's core desalination business.
      Through an agreement with the U.S. Department of Energy, Pacific
Northwest National Laboratory, and its administrator, Battelle
Memorial Institute, the Company has initiated a program to further
develop and commercialize an ozone water treatment technology
originally invented at the Kharkov Physical Technical Institute of the
Ukraine.
      A multi-year desalination product development program has been
fully defined and selected projects have been initiated.

      Staff

      Since my last letter in August, our staff has increased
dramatically. The Sigma acquisition and other recent hires has more
than doubled the Sigma staff. We have added a number of key senior
staff (see resumes on our website):

      --  Philip Johnson, formerly managing director of National Power,
        of the U.K., has joined us as VP of International Operations;

      --  Randall Peeters, Ph.D., former chief scientist of GenCorp
        Aerojet has joined us as chief scientist;

      --  Tom Redmon, formerly managing partner of Wilke, Fleury,
        Hoffelt, Gould & Birney has joined us as corporate counsel;
        and

      --  Sergey Puzhaev, former head of the Russian Space Fuel Cell
        Laboratory has joined us as director of development, Alkaline
        Fuel Cells.

      In addition to our current internal hiring, the Company has sought
to identify and retain other professional support, such as:

      --  Latham & Watkins (securities, corporate, transactions);

      --  Darby and Darby (intellectual property);

      --  First Union (investment banking and mergers and acquisitions).

      We are in the process of selecting a top-flight Investor
Relations/Press Relations firm as well as a search firm to help
augment our management team.
      Recent developments in California and elsewhere have highlighted
the stress on the current domestic power system and a burgeoning
market for new power sources. This coupled with further deterioration
of water supplies worldwide has us convinced that we continue on the
right track to create a Company that all of the shareholders can be
proud of.

Sincerely,                             Sincerely,

JP Maceda                              Gloria Rose Ott
President                              Chairman of the Board