Proton Energy Systems, Inc., a subsidiary of Distributed Energy Systems Corp. (DESC) , today announced its intention to provide hydrogen generation and fueling technologies as key infrastructure components for California's new "Hydrogen Highway" and renewable energy economy. The announcement was made at a California Fuel Cell Partnership event today where Governor Arnold Schwarzenegger signed an Executive Order officially launching the state's Hydrogen Highway program.

"We applaud Governor Schwarzenegger's sustainable energy vision for California and his desire to join with leading energy providers to ensure this vision becomes a reality," said Walter W. "Chip" Schroeder, President of Distributed Energy Systems. "Our company's proprietary technology and products can produce pure hydrogen from water and electricity. These hydrogen generators are in use at major industrial and commercial facilities across the nation. We believe this technology paves the way for the critical 'Hydrogen Highway' transportation applications of tomorrow," he said.

Schroeder said transportation represents one of the most exciting opportunities for Proton Exchange Membrane (PEM) electrolysis technology. "As an important participant in America's hydrogen economy future, our entry into the transportation market is an important growth strategy," he said. "When hydrogen fuel cell vehicles (FCV) come to market, we believe that existing energy suppliers will need to supply new forms of automotive fuel."

Schroeder said Proton is working with several companies, along with the California Fuel Cell Partnership, to supply hydrogen generator 'gas pumps' for installation at local service stations. The company also believes automotive manufacturers building introductory and fleet FCVs will be interested in Proton's fueling technology.

During last fall's gubernatorial race, Schwarzenegger highlighted Proton's HOGEN(R) hydrogen generation technology while introducing his energy and environmental policy platform. "Governor Schwarzenegger recognized that Proton's products enable the use of hydrogen as a non-depleting and non- polluting fuel for cars and in distributed energy applications to supplement our over-stressed electric power systems," Schroeder said. "When the electricity to run our hydrogen generators comes from solar, wind, or hydro power, a truly sustainable energy future can be achieved."

Proton has developed and commercialized hydrogen generators that transform energy into fuel. The company's system, which was exhibited at today's event, is capable of producing hydrogen fuel from water and electricity generated by renewable technologies. This innovative product presently is producing hydrogen on site for industrial users -- a critical element in applications such as cooling electric generating stations, oil, petrochemical, and fertilizer processing, semiconductor fabrication, and nanomaterial and high- performance metals production.

Proton presently has 17 of its hydrogen generators operating in California. In addition, the company recently won a $375,000 contract to develop a regenerative solar/PEM hydrogen fuel cells demonstration system at California's China Lake Naval Air Station. The company is a member of the California Fuel Cell Partnership and has been a proponent of hydrogen initiatives. Proton's sister company, Northern Power Systems, has installed a cogeneration system in American Canyon for Pokka Beverages; an energy efficient, on-site power system for Equity Office Properties' One Market St. Complex in San Francisco; and a solar power system for Southern California Edison to charge electric vehicles.

"Today, more than 20 billion cubic meters of hydrogen gas is produced annually in the U.S., and this market is expected to grow significantly as the nation develops a hydrogen infrastructure," said Schroeder.

About Proton Energy Systems

Proton Energy Systems, Inc. designs, develops, and manufactures Proton Exchange Membrane, or PEM, electrochemical products that it employs in hydrogen generating devices and in regenerative fuel cell systems that function as power generating and energy storage devices. Proton's HOGEN hydrogen generators produce hydrogen from electricity and water in a clean and efficient process using its proprietary PEM technology. For more information visit www.protonenergy.com .

About Distributed Energy Systems Corp.

Distributed Energy Systems Corp. (DESC) creates and delivers products and solutions to the emerging decentralized energy marketplace, giving users greater control over their energy cost, quality, and reliability. As the parent company of Proton Energy Systems ( www.protonenergy.com ) and Northern Power Systems ( www.northernpower.com ), Distributed Energy Systems delivers a combination of practical, ready-today energy solutions and the solid business platforms for capitalizing on the changing energy landscape. For more information visit www.distributed-energy.com .

This press release contains forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Statements contained herein that are not statements of historical fact, including statements concerning possible future sale or provision of hydrogen fueling technology may be deemed to be forward-looking information. Without limiting the foregoing, words such as "anticipates", "believes", "could", "estimate", "expect", "intend", "may", "might", "should", "will", and "would" and other forms of these words or similar words are intended to identify forward-looking information. Distributed Energy's actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors. Distributed Energy disclaims any obligation to update these forward-looking statements. Factors that could cause results to differ materially from those contained in Distributed Energy's forward-looking statements include, but are not limited to, our failure to complete development of our products, failure of our products to achieve commercial acceptance, our inability to expand our production facilities, manufacture our products at commercially acceptable costs or establish distribution relationships, the impact of competitive products, and other factors detailed in Distributed Energy's Form 10-K for the year ended December 31, 2003, and other filings Distributed Energy may make from time to time with the SEC.

PROTON(R), HOGEN(R), UNIGEN(R), FUELGEN(TM), HIPRESS(TM) and TRANSFORMING ENERGY(TM) are trademarks or registered trademarks of Proton Energy Systems, Inc.

SOURCE Proton Energy Systems, Inc.

John Glidden of Proton Energy Systems, +1-203-678-2148,
john.glidden@protonenergy.com , or Chris Prew of Tiziani Whitmyre, Inc.,
+1-781-793-9380, cprew@tizinc.com