The following disclosure is made pursuant to Item 5.02(e) of Form 8-K:

On August 19, 2009, the Compensation Committee of the Board of Directors (the "Committee") of Environmental Power Corporation (the "Company"), approved the following compensation arrangements with its executive officers:

Stock Appreciation Rights

After considering the guidelines set forth in the Company's 2008 Long-Term Incentive Plan (the "2008 LTIP") as well as limitations on the number of shares available under the Company's 2006 Equity Incentive Plan (the "2006 Plan"), the Committee approved the following stock appreciation rights under the 2006 Plan, each of which has an exercise price of $0.55 per share, which is in excess of the closing price of the Company's common stock as reported on The NASDAQ Capital Market on the date of grant:

                                               Number
                           Name                of SARs
                           Richard E. Kessel   100,000
                           Michael E. Thomas    25,000
                           Dennis Haines        25,000

The foregoing awards vest in three equal annual installments beginning on August 19, 2010, with vesting in full upon a change in control, as defined. The form of stock appreciation right agreement that we will enter into with our executive officers is filed as Exhibit 99.1 to this Current Report on Form 8-K, and we refer you to such exhibit for the complete terms of the agreement. The complete terms of the form of stock appreciation right agreement are incorporated herein by reference.

Restricted Stock Awards

After considering the guidelines set forth in the Company's 2008 LTIP as well as
limitations on the number of shares available under the 2006 Plan, the Committee
approved the following restricted stock awards under the Company's 2006 Plan at
a purchase price of $0.01 per share:



                                               Number
                          Name                of Shares
                          Richard E. Kessel      50,000
                          Michael E. Thomas      12,500
                          Dennis Haines          12,500

The foregoing awards vest in three equal annual installments beginning on August 19, 2010, with vesting in full upon a change in control, as defined. The form of restricted stock agreement that we will enter into with our executive officers is filed as Exhibit 99.2 to this Current Report on Form 8-K, and we refer you to such exhibit for the complete terms of the agreement. The complete terms of the form of restricted stock agreement are incorporated herein by reference.

The following disclosure is made pursuant to Item 5.02(f) of Form 8-K:

Information regarding management bonuses for 2008 was omitted from the Summary Compensation Table included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2008, as filed with the Securities and Exchange Commission on March 27, 2009, in reliance on Instruction 1 to Item 402(c)(2)(iii) and (iv) of Regulation S-K. The Committee has determined not to pay any bonuses in respect of services rendered in 2008.