ITEM 8.01. OTHER EVENTS

On July 31, 2009, Environmental Power Corporation (the "Company"), its subsidiary, Microgy Holdings, LLC ("Holdings"), the purchasers of the $62.425 million in tax-exempt bonds (the "Bonds") issued in connection with Holdings' tax-exempt bond financing in California in September 2008 (the "Bondholders") and Wells Fargo Bank, National Association, as Trustee (the "Trustee") entered into a First Amendment (the "Amendment") to the Demand Purchase Agreement, dated as of September 3, 2008, among the Company, Holdings, the Bondholders and the Trustee (the "Demand Purchase Agreement") to extend to September 15, 2009 the date until which the Bondholders may exercise the Option (as defined below), and to extend to September 30, 2009, the date on which the Company would be required to pay costs of issuance if the Option is exercised.

The Company, Holdings and the Bondholders deem it in their mutual best interests to extend the period of time during which the Option may be exercised, in light of current capital raising activities by the Company and Holdings. The purpose of the Amendment is to provide adequate time for continued discussions between the Company and Holdings, on the one hand, and the Bondholders, on the other hand.

Pursuant to the Demand Purchase Agreement, if certain conditions set forth in the Loan Agreement, dated as of August 1, 2008 (the "Loan Agreement") with the California Statewide Community Development Authority (the "Funding Conditions") were not met by June 30, 2009, the holders of a majority of the Bonds would have the option, exercisable by written notice to Holdings on or before July 31, 2009, to require Holdings to purchase the Bonds at par plus accrued interest on or before August 31, 2009 (the "Option"). If Holdings does not purchase the Bonds upon exercise of the Option, Holdings will be deemed to have abandoned construction of the Facilities, and the Bonds will be called for redemption. If the Bonds are called for redemption, the Company had agreed to contribute, on or before August 31, 2009, an amount equal to the portion of the proceeds of the Bonds used to pay costs of issuance. The Funding Conditions included (i) that Holdings' Huckabay Ridge facility has produced an average of 1,525 MMBtu of its RNG ® product per day for a period of 60 consecutive days (the "Test Period"),
(ii) that the Huckabay Ridge Facility has produced gross profit of at least $350,000 during the Test Period and (iii) that the Company, Holdings or Holdings' subsidiaries have raised an aggregate of at least $39.825 million in additional capital after September 3, 2008, of which at least $12.325 million is available for investment in the California facilities financed by the Bonds. As of June 30, 2009, the Funding Conditions had not been met, and the Option became exercisable.

---