ITEM 8.01. OTHER EVENTS

On September 15, 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 Second 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 30, 2009 the date until which the Bondholders may exercise the Option (as defined below), and to extend to October 15, 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 again 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, with the California Statewide Community Development Authority 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").