July 28, 2005

Sierra Nevada Brews up Environmentally Friendly Fuel Cell Electricity; Gov. Arnold Schwarzenegger honors brewery's commitment to ultra-clean energy at the dedication of a one-megawatt power plant designed and built by FuelCell Energy

CHICO, Calif., Jul 28, 2005 (BUSINESS WIRE) -- PG&E awards $2.4 million rebate to Sierra Nevada--green energy plant lightens the load on the power grid while significantly reducing air emissions

Calif. Gov. Arnold Schwarzenegger and Sierra Nevada Brewing Co., pioneer of the craft brewing industry and brewers of award-winning beers since 1981, today joined officials from three participating companies to dedicate a one-megawatt (1 MW) fuel cell power plant that is the largest commercial high-temperature fuel cell installation in the state and is classified as an Ultra-Clean technology under California law.

"Like any business, Sierra Nevada was looking for stable, affordable, reliable power, and they wanted to limit the environmental impact of their operation," said Gov. Schwarzenegger. "They found the answer in a hydrogen fuel cell that generates power on site."

Designed to create energy without combustion, the 1 MW power plant consists of four 250-kilowatt Direct FuelCell® (DFC®) power plants from FuelCell Energy, Inc. (NasdaqNM:FCEL). Its waste heat will be harvested in the form of steam and used for the brewing process as well as other heating needs. One MW of electricity (equivalent to the power needed to support approximately 500-1000 homes for a year) will supply essentially 100 percent of the brewery's base load power requirements. With this power plant, Sierra Nevada not only lowers its overall energy costs but also eliminates air pollutant emissions equivalent to removing 500 gasoline-powered cars from the road every year. When the fuel cells generate more power than the brewery requires, Sierra Nevada sends excess electricity back to the grid system and receives credit for a portion of its generation costs.

Pacific Gas and Electric Company presented a check in excess of $2.4 million as part of its Self Generation Incentive Program (SGIP), which assists customers installing clean on-site electric generation. These cash rebates help to offset the upfront costs associated with installation. The SGIP was created to encourage customers of electrical corporations to install clean distributed generation technologies. It currently runs through 2007 and provides up to $66 million per year in incentive funding for purchasing ultra-clean and renewable onsite power systems, including fuel cells. The Sierra Nevada fuel cell project also received $1 million financial support from the U.S. Department of Defense Climate Change Fuel Cell Program. The fuel cell system was installed by Alliance Power, a distribution partner of FuelCell Energy.

California is a leader in championing environmentally friendly solutions and supports businesses that work towards this goal. Existing law defines "ultra-clean and low-emission distributed generation" as an electric generation technology that produces zero emissions during operation or that produces emissions that are equal to or less than limits established by the California Air Resources Board (CARB).

Sierra Nevada will purchase electricity from the fuel cells through a power purchase agreement established by Alliance Power and FuelCell Energy. They will continue to buy additional power through PG&E. Sierra Nevada has the option to purchase the fuel cell power plant from Alliance and FuelCell Energy after 12 months in operation.

FuelCell Energy has over 40 installations throughout the world, with this being its sixth in California and second DFC power plant at a brewery--the first one located in Japan. In addition to the units at Sierra Nevada Brewing Co., there are five California DFC power plant installations including LADWP Headquarters, Main Street and Terminal Island in Los Angeles, and two at waste water treatment plants in Palmdale and Santa Barbara. FuelCell Energy expects to deliver power plants to four more customers in California within the next 12 months: Sheraton San Diego Hotel and Marina, Santa Rita Correctional Facility, U.S. Postal Service's San Francisco Processing and Distribution Center and The U.S. Marine Corps Air Ground Combat Center.

Sierra Nevada Brewing Co.

"In our ongoing efforts to operate the brewery in as ecologically clean and sustainable a manner as possible, I have invested in fuel cell technology, one of the greenest and most technologically advanced methods of electric generation available today," said Ken Grossman, Founder and Owner, Sierra Nevada Brewing Co. "This project is the cornerstone of many of the ongoing initiatives we have focused on to improve our efficiency and sustainability. Our goal is to have all our operations work hand in glove with our views on energy policy, recycling, cleaning practices, wastewater treatment, and material reuse."

FuelCell Energy Inc.

"Cooperative efforts between businesses, utilities and state leaders, like this project in California, are accelerating moves to improve the environment and manage total energy costs," said Jerry Leitman, Chairman and CEO of FuelCell Energy. "Direct FuelCell power plants are an important enabler in the reduction of greenhouse gas emissions and provide efficient and reliable power to customers like the Sierra Nevada Brewing Company."

Pacific Gas and Electric Company (PG&E)

"PG&E is proud to have partnered with Sierra Nevada in this endeavor which has such a positive impact on the local community and the environment," said Daniel D. Richard Jr., senior vice president of public policy and governmental relations at the utility. "Sierra Nevada's success in fuel cell energy demonstrates its foresight and innovation not only among breweries, but among American companies. The fuel cell rebate presented today represents one of the many ways in which PG&E helps customers manage their energy needs."

PG&E's self-generation incentive program provides financial incentives, to help pay the costs of on-site electric generating systems utilizing either solar, wind, fuel cell, micro turbine or internal combustion engine cogeneration systems.

Alliance Power

"Alliance Power appreciates the opportunity to work with Sierra Nevada Brewing Company and FuelCell Energy Inc on a successful project that showcases the reliability, energy efficiency, and environmental benefits of fuel cell technology," said James I. Michaels, President Alliance Power, Inc. "Alliance Power strongly believes that the project completed by Sierra Nevada Brewing Company will provide the brewery with reliable energy and significant cost savings for many years and, most importantly, also provides an outstanding example to other industries throughout California of a sustainable, ultra-clean, and cost-effective solution for generating on-site electrical power."

About Sierra Nevada Brewing Co.

Sierra Nevada Brewing Co. has a proud history as one of the pioneers of the craft brewing industry and as a brewer of award-winning beers since 1981. The Brewery is driven to operate in an efficient and environmentally sound manner. Sierra Nevada considers resourcefulness a philosophy and has pioneered efforts to integrate environmental values into management decisions and practices. More information is available at www.sierranevada.com.

About PG&E

Pacific Gas and Electric Company, is one of the largest combination natural gas and electric utilities in the United States. Based in San Francisco, the company is a wholly owned subsidiary of PG&E Corporation. The company employs 20,000 employees which provides natural gas and electric service to approximately 15 million people throughout a 70,000-square-mile service area in northern and central California.

About Alliance Power, Inc.

Alliance Power, Inc. has developed economical and environmentally acceptable distributed generation (DG) facilities ranging in size from 1 MW to 49 MW. The company's unique approach to DG projects maximizes the use of existing utility infrastructure to reduce costs. Alliance Power performs all aspects of project implementation including siting, planning, permitting, designing, constructing, financing, and operating. The company has a proven team, and has the experience and technology to deliver DG power supplies on schedule - with economical and competitive rates. Alliance Power has a staff experienced in providing power generation development in a variety of settings and for a wide array of clients. Alliance Power's headquarters are located in Littleton, Colorado with regional offices across the U.S. More information is available at www.alliancepower.com.

About FuelCell Energy, Inc.

FuelCell Energy develops and markets ultra-clean power plants that generate electricity with up to twice the efficiency and tens of thousands times less air pollution than older conventional fuel-burning plants. Creating energy from self-contained reactions, fuel cells produce base load electricity where commercial and industrial customers face cost, reliability, security or environmental issues with their existing energy supplies. 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 has generated over 70 million kilowatt-hours of electricity from over 40 power plant sites around the globe, and conducts R&D on next-generation fuel cell technologies to meet the world's ever-increasing demand for green energy. For more information on the company, its products and its worldwide commercial distribution alliances, please see http://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 Hot Module® balance of plant design from MTU CFC Solutions, GmbH, a subsidiary of DaimlerChrysler.

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.

SOURCE: FuelCell Energy, Inc.

Sierra Nevada Brewing Co.
Laura Harter, 530-893-3520
FuelCell Energy, Inc.
Investment Community
Steven P. Eschbach, CFA, 203-825-6000
FuelCell Energy, Inc.
Suzanne McGee, 781-898-9585, ext 717
Pacific Gas & Electric
Lisa Randle, 530-896-4587

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