High-Efficiency FuelCell Energy System Will Generate Both Electricity and Pure Hydrogen - Ideal for Vehicle Refueling Stations and Industrial Applications Requiring Hydrogen

DANBURY, Conn.--FuelCell Energy, Inc. (NasdaqNM:FCEL), a leading manufacturer of ultra-clean electric power generation plants for commercial, industrial, and government customers, today announced development of a cost-efficient system to separate pure hydrogen from a gas mixture that then can be sold as fuel for hydrogen vehicles or industrial uses. The U.S. Department of Defense (DoD) has awarded FuelCell Energy $1.36 Million to advance this Electrochemical Hydrogen Separator (EHS) project for use with the company's Direct FuelCell(R) (DFC(R)) power plants.

Unlike other means of separating hydrogen, which rely on compression, FuelCell Energy's proprietary EHS technology has no moving parts. As a result, it is anticipated to be significantly more reliable and efficient than conventional methods. EHS is expected to save up to one-half of the energy required when compared to conventional compression based-methods of hydrogen separation.

A subscale prototype EHS unit developed by FuelCell Energy is currently operating at the University of Connecticut Global Fuel Cell Center. This test was made possible through a $600,000 grant provided by the Connecticut Clean Energy Fund under its operational demonstration program. The subscale EHS system currently produces 1200 liters per hour of pure hydrogen. With the DoD award, the unit will be scaled up by a factor of 25 and will operate in conjunction with a sub-megawatt DFC power plant in Danbury for testing.

"This contract award combines our expertise in ultra-clean and high efficiency power generation from our DFC products with the strength of our electrochemical separation technology," said Christopher R. Bentley, Executive Vice President, Government Research and Development Operations for FuelCell Energy. "This product has the potential to support the market demand for fuel cell automobiles as well as onsite hydrogen supply for industrial applications."

In 2003, President Bush announced a $1.2 billion Hydrogen Fuel Initiative created to decrease America's dependence on foreign oil by developing the technology needed for commercially viable hydrogen-powered fuel cells to power cars, houses and businesses that produce no pollution and no greenhouse gases. Hydrogen has the highest energy content per unit of weight of any known fuel and when burned in an engine, hydrogen produces effectively zero emissions.

FuelCell Energy's EHS system is the most promising way of meeting the targets set by the U.S. Department of Energy (DOE) to lower the price of hydrogen to be competitive with the cost of gasoline. Currently hydrogen is three to four times as expensive to produce as gasoline according to the DOE's Energy Efficiency and Renewable Energy statistics. Whether it be used for generating hydrogen for an energy station or for an industrial customer, being able to produce hydrogen onsite through EHS would eliminate the complex issues involved with transporting and storing hydrogen. There is a significant market for industrial customers such as chemical and petrochemical manufacturers, heat treaters, pharmaceutical companies, glass manufacturers and refineries that would recognize the benefit of producing onsite power and hydrogen.

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.