Company Update

Safe Harbor Statement

This presentation contains forward-looking statements, including statements regarding the company's plans and expectations regarding the development and commercialization of fuel cell technology. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The forward-looking statements speak only as of the date of this presentation. The company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the company's expectations or any change in events, conditions or circumstances on which any such statements are based.

Overview

•66% of the world’s electricity was from fossil fuels in 20052

•Wind and solar are providing less than 2% of total electricity due to intermittent nature²

•Environmental needs driving ultra-clean power generation solutions

•Ability to reduce energy cost and CO2 is dependent on increasing energy efficiency…

1. Energy Information Administration, “International Energy Outlook 2007, p. 61.2. International Energy Agency, Key World Energy Statistics 2007, p. 24.

Global demand for electric power expected to grow from

16.4 to 27.1 trillion kWh by 2025¹

Overview

DFC products provide commercial, industrial and utility customers:

•Higher electrical efficiency than competing technologies

•Near-zero NOX, SOX and lower CO2 emissions

•Reliable, secure, 24/7 uninterrupted power

•Competitive economics

•Cleaner & quieter operation

•Fuel flexibility

•Connection to existing electricity and fuelinfrastructure

•Grid independence and more control over power costs San Diego Sheraton, CA

FCE is uniquely positioned to capture the commercial, industrial and utilities ultra-clean power generation market

Revenues and Backlog

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Total Sales and Revenues Total Backlog

High Electrical Efficiency is the Key to Customer Value

In power generation all fuel ends up as electricity or heat

Fuel

12 – 16 cents/kWh

0.5 – 2 cents/kWh

Electricity

Heat

Electricity is worth 6 to 30 times as much as heat

High Electrical EfficiencyHigh Electrical Efficiency

DFC power plants offer the highest efficiency of any distributed generation technologies

High Electrical Efficiency

Fu

el t

o E

lect

ric

al E

ffic

ien

cy 60%

40%

20%

30%

50%

10%

Micro-turbines25 – 30%

Small Gas Turbines25 –35%

Natural Gas Engines30 – 42%

DFC-ERGDFC/Turbine

58 – 65%Direct

FuelCell (DFC)47%

Grid Support, RPS10 MW +

1.4 MW

300 kW

Typical Applications

Average-SizedGrocery Stores,300-Bed Hotels

300-Bed Hospitals,Manufacturing,

Universities

1000-Bed Hotels, Convention Centers,

Wastewater Treatment, Food/Beverage

2.8 MW

Case Study

•Challenge:– Need for reliable, cost effective, ultra-

clean source of power

•Solution:– 1 MW of fuel cells provide 24/7 power

and high efficiency– Uses both anaerobic digester gas &

natural gas for fuel– Fuel cell waste heat used in anaerobic

digester process – Excess electricity sold to the grid

•Results:– >20% savings in energy costs – Carbon savings is equivalent to

removing ~500 cars/year

Sierra Nevada Brewing needed a reliable power supply

Case Study

•Challenge:– Facility with 4,000 inmates in 18

housing units needed 24/7, ultra-clean, reliable power to supplement the intermittent power from its solar array

•Solution:– 1 MW of fuel cells for ultra-clean, 24/7

power– Waste heat used to make hot water

•Results:– Fuel cells provide 30% of 24/7 electric

requirements & 18% of jail’s hot water needs

– County of Alameda estimates its energy savings at over $250,000 a year

Santa Rita Jail needed ultra-clean, reliable, 24/7 power

Case Study

Sharp – one of the world’s largest solar panel makersneeded 24/7 power for its “Super Green Factory”

•Challenge:– Sharp needed reliable, high

efficiency, 24/7 power for its new “Super Green” flat screen television factory

•Solution:– 1 MW of fuel cells provide near-zero

emissions and high efficiency– Waste heat is fed to an absorption

chiller to provide factory air conditioning

•Results:– Largest fuel cell installation in Japan– CHP application provides energy

savings– ~3,000 tons of CO2 saved annually– Plant called Sharp’s “Crown Jewel” in

full page in NY Times ad

BuildMulti-Megawatt and RPS Markets

Path to Profitability

Strategy

Leadership Key Geographies

Product Cost Reductions

BuildOn-site Markets

Markets•65 MW installed/backlog

– Japan/Korea: 42 MW – California/West Coast: 15 MW – Northeast/Canada: 4 MW– Europe: 2 MW

•Targeted applications– Grid Support: 39 MW– Renewable/Wastewater: 9 MW– Manufacturing: 6 MW – Hotels: 3 MW – University & Hospitals: 2 MW – Government: 3 MW– DFC-ERG 1 MW

Multi-MW and RPS Markets•Connecticut Project 150•POSCO Power agreement targets multi-MW potential in South Korea

Market Leadership

Build MW and Multi-MW Markets

•Target Renewable Portfolio Standard (RPS) markets

– 28 states and D.C. now have RPS mandates– Estimated at 88 GW by 2025

•Cost effective due to high efficiency

•Avoids new generation, transmission and distribution investment and roadblocks

•Addresses customer demand for RPS solutions

•Utilities will participate to satisfy RPS requirements and avoid penalties

•Federal Investment Tax Credit includes utilities for the first time

– $3000/kilowatt or 30% of project cost– Extends through 2016

DFC-ERGTM

14.4 MW DFC® Plant

MW-Class:Connecticut

•Connecticut has RPS mandate– 27% of peak electricity

consumption, or about 1,000 MW, from clean generation by 2020

– Funded RPS requires 150 MW near-term

•16.2 MW of DFC projects approved in Round 2:

– 9 MW DFC-ERG with ~60% efficiency

– Two DFC 3000 hospital projects

•27 MW of DFC projects approved in Round 3 draft:

– 3 DFC-ERG, 5 DFC3000 and 1 DFC/T

– DFC-ERG and DFC/T ~60% efficiency

– Final decision due April 2009

1.2 MW DFC1500 at Pepperidge Farm Bakery in Bloomfield, CT

MW-Class:Asia

•Asia is adopting distributed generation

•Kyoto Protocol drives ultra-clean, 24/7 need

•Fuel cells declared a key economic driver in S. Korea

•POSCO Power ordered 38.2 MW to date

•POSCO Power formed a fuel cell marketing alliance with S. Korea’s only electric utility

•50 MW Balance of Plant production facility opened in September 2008

POSCO BOP Manufacturing Plant

World’s 1st DFC3000 Installation in Korea

MW-Class:California

•Large installed base and backlog

•California is a leader in clean energy deployment

– Coal and nuclear power generation not welcome

– AB32 strictly regulates greenhouse gases restricting use of turbines and engines

– Self-Generation Incentive Program increased to include MW-Class power plants

•Distributed generation deployment is easier and faster than large central generation power plants

•55% of electricity generation in California is from natural gas

1 MW at California State University, Northridge

Wastewater Market

•Wastewater treatment facilities and food/beverage processors are a growing source of renewable biogas

– Using biogas in combustion-based turbines and engines produces pollution

– Fuel cells produce ultra-clean power using biogas more efficiently than any other distributed generation solution their size

•Byproduct heat is used in treatment process increasing efficiency up to 80%

•~50% of FuelCell Energy’s California installations and backlog are at wastewater and food/beverage facilities

1 MW DFC1500 at a wastewater treatment facility in southern CA

MW-Class:DFC-ERG

•DFC-ERG provides heat for natural gas pipeline letdown operations

– Heat warms gas to prevent freezing as pressure is let down from trans-continental pipelines to local lines

– Excess electricity sold to the grid

• Improved economics and lower carbon emissions from 60% electrical efficiency

•First site commissioned in Toronto – Second site slated for Milford,

Conn. under Round 2 of Project 150

– Market opportunity extends to gas utilities worldwide• Estimated at 250-350 MW in

Toronto, California and the Northeast U.S.

GlobalDistribution

Our product costs are declining while grid power

costs are increasing

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1996 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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DFC Product Cost, % of Original

Unsubsidized DFC Power Cost w $10/MMBtu fuel

Unsubsidized DFC Power Cost with ADG fuel

Grid Power Costs (CT, commercial rate)

Solar PV 30 to 40 cents/kWh

Cost of Electricity

DFC3000 Cost Savings

1st gross margin profitable MW-class units will be manufactured starting in July 2009

Captured Cost Reduction from 2003-2006

Technology Uprate20%

Value Engineering

54%

Supply Chain Management

13%

Service Process Improvement

4%

Manufacturing Process

Improvement9%

Future Cost Reductions to Less Than $2000/kW

Value Engineering & Mfg. Process Improvement

21%

Power Uprate29%

Volume Related Manufacturing Improvement

14%Volume Related

Sourcing14%

Global Sourcing22%

Competitive Advantages

•Distributed generation puts power where customers need it

•Increases power reliability

•Uses existing transmission & distribution lines

•Reduces need for central power plants

•Balances the grid with 24/7 power that enables increased solar and wind generation

•Meets requirements for low carbon technology

•Smaller project sizes enable quick permitting, financing, and execution

Fuel cell power plants enable broad based distributed generation

600 kW at M&L Commodities

Production Capabilities

• Production and delivery capabilities meet current demand

• State-of-the-art manufacturing in Torrington, Conn.

• 50 MW capacity

• Production rate of 30 MW/year

• Strong supply chain in place

• Expansion plan to achieve 150 MW capacity

– Add production capacity to furnace and other operations

– Build conditioning facilities local to customer base

Torrington, CT

Danbury, CT

Summary

• Product performance expanding markets

• Customers/applications providing repeatable order flow – Asia, California, CT

• RPS and South Korean markets creating multi-MW volume

• Established manufacturing capability to meet current and future demand

• Cost reduction and volume on path to profitability

– New MW-class design in production 4FQ2009 will be first gross margin profitable products

Pohang, Korea