----Environmental
Power Corporation (the "Company") (AMEX: EPG ) today announced that its
wholly-owned subsidiary, Microgy Cogeneration Systems, Inc.
The agreement provides that Microgy and South-Tex will cooperate
to identify, evaluate and develop projects in the United States that
combine Microgy's anaerobic digestion technology, which extracts
methane -rich biogas from animal waste, and South-Tex's cleaning and
compression technologies that can be used to refine biogas to a
pipeline-grade methane. With respect to each project that the parties
agree to develop, Microgy will provide all necessary designs and
engineering to construct the digester portion of the project, and
South-Tex will provide all necessary engineering to couple the
digester to its gas cleaning and compression technologies to produce
marketable biogas.
The potential sale of refined biogas would create an ongoing revenue
stream, and represents the continuing evolution of Microgy's business
strategy.

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"
Daniel J.

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South-Tex has locations in Texas, Kansas and
Colorado.

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For
more information visit the Company's web site at
www.

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While Microgy and South-Tex are currently reviewing potential
projects on which to cooperate under this agreement, the development
of any projects under the agreement remains subject to the further
mutual agreement of Microgy and South-Tex. Furthermore, each project
will be subject to the negotiation and execution of definitive
agreements among Microgy, South-Tex and relevant third parties,
including agreements relating to the location, construction,
financing, ownership and operation and maintenance of the project and
the purchase of the refined biogas produced by the project.

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Additional information can be obtained at www.

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southtex., holds an exclusive
license in North America for the development and deployment of a
proprietary anaerobic digestion technology for the extraction of
methane gas from animal wastes for its use to generate energy. Environmental Power undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

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ABOUT ENVIRONMENTAL POWER CORPORATION

Environmental Power Corporation is a developer, owner and operator
of renewable energy production facilities.

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Its principal operating
subsidiary, Microgy Cogeneration Systems, Inc.

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H. In addition, Microgy will retain operational
control over the digester portion of each project, and South-Tex will
be responsible for directing the operation of the cleaning and
compression technologies, as well as the processing, handling,
interconnecting and compliance monitoring duties necessary to produce
the refined biogas and deliver it to the final purchaser.

Food Processing Equipment showcases machinery and technology that supports the industrial food processing industry.

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Environmental Power Corporation's Microgy Cogeneration Systems Inc. Subsidiary Signs Project Development Agreement with South-Tex Treaters Inc.

Business Editors

PORTSMOUTH , N.

South-Tex Treaters was founded in 1986 to provide contract gas
treating services and equipment .

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This agreement illustrates the flexibility of Microgy's technology and
its various potential applications.

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Eastman, Senior Vice President of Business Development
at Microgy, "We are proud to be working with South-Tex in harnessing
and marketing one of the nation's most abundant renewable resources.

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of Odessa, Texas ("South-Tex"), which for
almost 20 years has been a leader in the gas processing industry.
Kam Tejwani, President and Chief Executive Officer of
Environmental Power, commented, "We believe that by working together,
Microgy and South-Tex can produce quality , refined biogas in
sufficient quantities to create profit opportunities for both parties.environmentalpower .

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("Microgy"), has entered into a Project Development Agreement with
South-Tex Treaters, Inc.com

CAUTIONARY STATEMENT

Certain statements contained in this press release such as
statements concerning planned projects, statements containing the
words "may," "assumes," "forecasts," "positions ," "predicts,"
"strategy," "will," "would," "expects," "estimates," "anticipates,"
"believes," "projects," "intends," "plans," "budgets," "potential,"
"continue," "opportunity" and variations thereof, and other statements
contained in this press release regarding matters that are not
historical facts are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995.

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Because such
statements involve risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking
statements.

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"

ABOUT SOUTH-TEX TREATERS , INC. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of
the date that they are made.

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The company has expanded over the
years into the design, construction and start up of many types of
facilities, including amine plants, physical solvent plants, glycol
dehydrators, refrigeration/dew point control plants and catalytic
oxygen removal units.

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Factors that could cause actual results to differ
materially include, but are not limited to, uncertainties involving
development stage companies, uncertainties regarding project
financing , the lack of binding commitments and the need to negotiate
and execute definitive agreements for the construction and financing
of projects, financing and cash flow requirements and uncertainties ,
difficulties involved in developing and executing on a business plan,
difficulties and uncertainties regarding acquisitions, technological
uncertainties, risks relating to managing and integrating acquired
businesses, 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 Environmental Power's or
Microgy'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 Environmental Power and Microgy operate and other
factors, including those described in the Company's most recent Annual
Report on Form 10-K, most recent Quarterly Report on Form 10-Q, as
well as other filings Environmental Power makes with the Securities
and Exchange Commission.