DANBURY, Conn.-- FuelCell Energy, Inc. (NasdaqGM:FCEL - News), a leading manufacturer of secure ultra-clean power plants using a variety of fuels for commercial, industrial and utility customers, today announced that its strategic alliance partner POSCO (NYSE:PKK - News) has formed a partnership with the woorld's fifth-largest electric utility, Korean Electric Power Company (KEPCO), to develop and jointly market power plants incorporating fuel cell stack modules manufactured by FuelCell Energy.

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On Monday, the presidents of POSCO and KEPCO announced the signing of a memorandum of understanding (MOU) for the development of the sector, which aims to build customer demand and expand deployment of ultra-clean, high efficiency fuel cell technology in this promising overseas market. ``The partnership with KEPCO reflects POSCO's consistent efforts to find new energy sources for the future. We expect the MOU to contribute a great deal to boosting demand for new energy,'' said POSCO President Lee Ku-taek in the Korea Herald.

KEPCO is the parent company of all six of South Korea's major electric generating companies, which together supply over 95 percent of the country's electricity, or 60 gigawatts (GW) of installed generating capacity, with growth anticipated to reach 86 GW by 2015.

In 2005, the Korean government announced a renewable portfolio agreement (RPA) targeting growth in the installed capacity of New and Renewable Energy (NRE) from 1.1 percent to 5 percent by 2011. Beyond 2011, the International Energy Agency (IEA) projects NRE sources could eventually satisfy 30 percent of the country's electricity needs. Fuel cells, which are highly efficient, ultra-clean, and provide reliable electric output regardless of weather conditions, are a government approved NRE technology. The partnership with POSCO announced yesterday positions KEPCO as a leader in this field.

Under the deal, POSCO will also provide a 2.4 megawatts (MW) power plant to KEPCO affiliate Korea South East Power Company (KOSEP) by next year. The KOSEP order is part of the aggregated 7.8 MW ordered by POSCO this year, which was previously announced by FuelCell Energy.

POSCO intends to break ground soon on a new factory in the southern city of Pohang, which will be capable of producing 50 MW by 2008 and 100 MW by 2010. When completed, this facility will be the world's largest by production capacity. Under the agreement with POSCO announced in February, FuelCell Energy will continue to manufacture the core fuel cell modules, while POSCO will provide the balance of plant equipment and system integration activities.

``This MOU between POSCO and KEPCO represents an important step for fuel cell deployment in South Korea,'' said Ben Toby, Vice President of Global Business Development for FuelCell Energy. ``The alliance substantially expands POSCO's market reach for fuel cells to customers of the existing utility companies, and allows KEPCO to implement this cutting-edge energy technology to best meet the needs of its customers, and Korea's energy future.''

Last year, the Korean Ministry of Commerce, Industry and Energy passed a new renewable energy subsidy program, under which fuel cells powered by biogas and natural gas received subsidies in excess of the amounts allocated to wind power, biomass, and hydro, and second only to solar power. For fuel cells running on natural gas, the current subsidy is $0.30/kilowatt hour (kWh) and $0.25/kWh for those running on biogas up to a cap of 50 MW. A binding Renewable Portfolio Standards program with expanded MW targets for NRE is expected to be signed into law by 2009. With these policies in place, Korea is slated to become one of the world's leading adopters of ultra-clean fuel cell technology.

About FuelCell Energy, Inc.

FuelCell Energy is the world leader in the development and production of stationary fuel cells for commercial, industrial, municipal and utility customers. FuelCell Energy's secure, ultra-clean and high efficiency DFC(r) fuel cells are generating power at over 50 locations worldwide. The company's power plants have generated more than 180 million kWh of power using a variety of fuels including renewable wastewater gas, biogas from beer and food processing as well as natural gas and other hydrocarbon fuels. FuelCell Energy has partnerships with major power plant developers, trading companies and power companies around the world. The company also receives substantial funding from the U.S. Department of Energy and other government agencies for the development of leading edge technologies such as hybrid fuel cell/turbine generators and solid oxide fuel cells. For more information please visit our website at http://www.fuelcellenergy.com.