Proton Energy Systems, Inc., a subsidiary of Distributed Energy Systems Corp. (Nasdaq: DESC) and a manufacturer of HOGEN® on-site hydrogen generator systems, announced today the termination of its distribution agreement by General Electric Company (GE) effective August 24, 2004. GE has given Proton no reason for terminating the agreement.
 

Proton Energy Systems President, Walter "Chip" Schroeder stated, "We are seeking an explanation of GE's rationale for terminating the agreement. We do not believe their termination was motivated by any actions on our part. In fact, the units that we have placed with GE, including a system delivered more than two years ago, are performing well. Proton will continue its good faith effort to address and resolve this matter, but we cannot be confident of a fair and satisfactory outcome."

About Proton Energy Systems, Inc.

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 http://www.protonenergy.com .

About Distributed Energy Systems Corp.

Distributed Energy Systems Corp. (Nasdaq: DESC - News) 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 (http://www.protonenergy.com) and Northern Power Systems (http://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 http://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 distribution of Proton hydrogen generators by GE, 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-Q for the quarter ended March 31, 2004, and other filings Distributed Energy may make from time to time with the SEC.