Caterpillar Inc. and FuelCell Energy, Inc. are expected to win a contract to install one of the nation's first advanced utility-scale fuel cell power plants designed to feed power from a substation into a local electric distribution system. The innovative project award is the first by the state of Ohio, which is investing more than $100 million in a three-year initiative to expand fuel cell research and development, including increased fuel cell generating capacity.

The award, which is subject to negotiation and execution of a contract, proposes the installation of a 250-kilowatt Direct FuelCell power plant manufactured by FuelCell Energy and distributed by Caterpillar. The formal contract is expected to be negotiated and signed within weeks and installation of the unit is scheduled for the fourth quarter of this year.

The project award was announced today by Ohio Governor Bob Taft at a ceremony in Westerville, Ohio attended by Marc Gerken, President of American Municipal Power-Ohio, Mike Heyeck, Westerville City Council Chair, Sherril West, Vice President, Caterpillar, Inc., and Herb Nock, Sr. Vice President, FuelCell Energy, Inc.

Caterpillar dealer Holt Power Systems Ohio, Inc. is expected to make the sale to American Municipal Power-Ohio (AMP-Ohio), which is managing the fuel cell generation project on behalf of the city of Westerville -- located near Columbus, Ohio.

"We are very pleased to be a part of this historic step to demonstrate the viability of fuel cell technology in a local electric distribution system," said Sherril West, Caterpillar vice president with responsibility for the company's Technical Services Division. "We applaud Governor Taft and the state of Ohio for their leadership in accelerating deployment of stationary fuel cells. Caterpillar is investing in socially responsible energy solutions, and fuel cell technology strengthens our position as the global leader in distributed power."

"We congratulate and thank Governor Taft, the Ohio Department of Development, AMP-Ohio and the City of Westerville for their leadership and innovation. We share their vision that fuel cells will play a major role in meeting the reliability, security, environmental, and energy efficiency needs of the 21st century," said Jerry D. Leitman, Chairman and CEO of FuelCell Energy, Inc. "Because our DFC power plants are designed to generate hydrogen internally, we can deliver this power plant today without waiting for development of a hydrogen supply infrastructure."

Fuel cells are similar to large, continuously running batteries, using natural gas or other fuel to generate electricity through electrochemical reactions. In addition to grid support, the ultra low emission units provide steady, reliable power to industrial and commercial customers such as hospitals, hotels, factories and telecommunications facilities. Each fuel cell unit can generate an estimated two million-kilowatt hours of electricity annually -- enough to power about 250 homes or the base load requirements of a small hotel.

In April 2002, Caterpillar and FuelCell Energy signed an alliance agreement to distribute and develop ultra-low emission fuel cell power generation products for industrial and commercial use. The agreement calls for the companies to jointly develop Caterpillar-branded power plants in the 250kW to 3MW size range, incorporating FuelCell Energy's fuel cell module. EC