PORTSMOUTH, N.H. -- Environmental Power Corporation's Microgy Inc. subsidiary has executed definitive lease and manure handling agreements with several California dairies for the development of renewable gas facilities.

At full operation, these facilities are expected to generate approximately 8,000 mcf/day of RNG(TM), an amount sufficient to fulfill Microgy's saleable gas rights under the recently announced long term purchase contract with Pacific Gas & Electric (PG&E). RNG is Microgy's branded, renewable, pipeline quality methane product.

The dairies -- Bar 20 Partners; Maddox Dairy; Joseph Gallo Farms; Lancing LLC; Hollandia Farms Inc.; and Cloverdale Dairy, LLC -- will host Microgy's owned and operated facilities capable of supplying an aggregate of more than 2.5 billion cubic feet of RNG annually, or the equivalent natural gas needs of approximately 50,000 California residences, while concurrently capturing nearly one million metric tons annually of greenhouse gas emissions.

As California has recently enacted mandates to reduce greenhouse gases, these carbon credits are expected to have significant value, as they would have an estimated annual value of more than $3 million based on current prices for such credits on the Chicago Climate Exchange.

Rich Kessel, president and CEO of Environmental Power said, "Today's announcement firmly establishes our entry into California, the largest dairy market in the United States. We view our first mover status, proven and efficient technology and PG&E's commitment to purchase our RNG as further validation of our business model. We will continue to aggressively pursue additional manure supply and long-term gas purchase agreements in this largely untapped market.

"The standardized, multi-tank gas production facilities that Microgy will install, own and operate in California will mirror the facilities currently in construction and development at four locations in Texas, and we intend to explore long-term, tax-exempt financing for the California facilities, similar to the financing we recently completed for the Texas facilities."

Stephen Maddox, managing partner of Maddox Dairy, said, "I'm excited to be part of an effort that promises economic opportunity and enhances environmental stewardship. I am proud to know that, in addition to providing milk products, my dairy operation will generate renewable energy to fuel California's businesses and homes."

Mike Gallo, CEO of Joseph Gallo Farms, added, "Our strategic partnership with Microgy allows us to diversify our revenue stream, enhance dairy operations and continue our strong commitment to the environment." The agreement announced today represents the second agreement between Microgy and Joseph Gallo Farms to develop multi-tank digester facilities on dairies owned by Joseph Gallo Farms in Atwater, Calif. Microgy and Joseph Gallo Farms in July 2005 announced their first agreement for the construction of an anaerobic digester facility designed to supply RNG to offset propane use in Joseph Gallo Farms' cheese production facility.

"These strategic partnerships are very exciting and represent a milestone for Microgy," said Jeff Dasovich, Microgy's senior vice president based in California. "We believe that they represent the tip of the iceberg for Microgy's development and growth in California's vital dairy sector.

"One of our standard systems digests the manure from approximately 10,000 milking cows. There are about 1.6 million dairy cows in California's Central Valley. Our relationship with PG&E and the dairy agreements announced today highlight our market leadership position and provide a solid platform on which to grow Microgy's RNG asset base and bring tangible benefits to California's residents, its agricultural community and the environment."

Environmental Power Corporation is a developer, owner and operator of renewable energy production facilities. Its principal operating subsidiary, Microgy Inc., 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 to generate energy.

SOURCE: Environmental Power Corporation via PR Newswire.