<SUBMISSION>
<ACCESSION-NUMBER>0000927016-02-002782
<TYPE>SC 13D/A
<PUBLIC-DOCUMENT-COUNT>3
<FILING-DATE>20020513
<SUBJECT-COMPANY>
<COMPANY-DATA>
<CONFORMED-NAME>ENVIRONMENTAL POWER CORP
<CIK>0000805012
<ASSIGNED-SIC>4991
<IRS-NUMBER>042782065
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13D/A
<ACT>34
<FILE-NUMBER>005-39155
<FILM-NUMBER>02644377
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>500 MARKET ST
<STREET2>STE 1E
<CITY>PORTSMOUTH
<STATE>NH
<ZIP>03801
<PHONE>6034311780
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>500 MARKET ST
<STREET2>STE 1E
<CITY>PORTSMOUTH
<STATE>NH
<ZIP>03801
</MAIL-ADDRESS>
</SUBJECT-COMPANY>
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>BRANT BENJAMIN J
<CIK>0001156298
<ASSIGNED-SIC>2200
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13D/A
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>7553 GARTNER RD
<CITY>EVERGREEN
<STATE>CO
<ZIP>80439
<PHONE>3033849402
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>7553 GARTNER RD
<CITY>EVERGREEN
<STATE>CO
<ZIP>80439
</MAIL-ADDRESS>
</FILED-BY>
<DOCUMENT>
<TYPE>SC 13D/A
<SEQUENCE>1
<FILENAME>dsc13da.txt
<DESCRIPTION>AMENDMENT NO. 1 TO SCHEDULE 13D
<TEXT>
<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 13D
                                 (Rule 13d-101)

                                (Amendment No. 1)

                         Environmental Power Corporation
                           ---------------------------
                                (Name of Issuer)

                          Common Stock, $.01 par value
                           ---------------------------
                          (Title of Class of Securities)

                                  29406-L-10-2
                           ---------------------------
                                 (CUSIP Number)

                           Steven I. Himelstein, Esq.
                              Dorsey & Whitney LLP
                                 250 Park Avenue
                            New York, New York 10077
                                 (212) 415-9200
                    ------------------------------------------
                  (Name, Address and Telephone Number of Person
                 Authorized to Receive Notices and Communications)

                                   May 2, 2001
                           ---------------------------
              (Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [_]

                         (Continued on following pages)
                              (Page 1 of 31 Pages)

<PAGE>

                                                                 Page 2 of 31

                                 SCHEDULE 13D
                                 ------------

CUSIP No.  29406-L-2
--------------------

1.       NAME OF REPORTING PERSON
         S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

                  Benjamin Brant

2.       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*

                                                    (a) [_]

                                                    (b) [X]

3.        SEC USE ONLY

4.       SOURCE OF FUNDS

                  N/A

5.       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
         ITEMS 2(D) OR 2(E)

                  N/A

6.       CITIZENSHIP OR PLACE OF ORGANIZATION

                  United States

--------------------------------------------------------------------------------
              NUMBER OF                 7.  SOLE VOTING POWER
               SHARES                            2,435,552
--------------------------------------------------------------------------------
             BENEFICIALLY               8   SHARED VOTING POWER
               OWNED BY                          0
--------------------------------------------------------------------------------
              REPORTING                 9.  SOLE DISPOSITIVE POWER
               PERSON                            2,435,552
                WITH
--------------------------------------------------------------------------------
                                        10.  SHARED DISPOSITIVE POWER
                                                 0
--------------------------------------------------------------------------------

11.      AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

                  2,435,552

12.      CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
                  N/A

13.      PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)  12.2%

14.      TYPE OF REPORTING PERSON*

                  IN

<PAGE>

                                                                 Page 3 of 31

                                  SCHEDULE 13D
                                  ------------

CUSIP No.  29406-L-2
--------------------

         This Amendment No. 1 to Schedule 13D is being filed by Benjamin Brant
to amend the Schedule 13D (the "Schedule 13D") originally filed by Mr. Brant on
August 2, 2001. Capitalized terms used but not defined herein have the meanings
assigned to such terms in the Schedule 13D.

Item 1.  Security and Issuer:
         -------------------

         Item 1 of Schedule 13D is hereby amended to read as follows:

         "Common Stock, $.01 par value per share of Environmental Power
Corporation, a Delaware corporation (the "Company"). The address of the
Company's principal executive office is One Cate Street, 4th Floor, Portsmouth,
NH 03801."

Item 2.  Identity and Background:
         -----------------------

         Items 2(b) and 2(c) are hereby amended to read as follows:

"(b)     Mr. Brant's business address is 7553 S. Gartner Road.

(c)      Mr. Brant was, until March 15, 2002, Chief Technology Officer of
         Microgy Cogeneration Systems, Inc. ("Microgy"), 1767 A Denver West
         Boulevard, Suite 15, Golden CO 80401. Microgy's principal business
         is environmentally sound power generation, including biomass and
         distributed generation. Mr. Brant is currently a consultant in the
         energy and environmental industries."

Item 4.  Purpose of Transaction.
         ----------------------

         Item 4 of Schedule 13D is hereby amended by adding the following before
the final paragraph of such Item:

         "On May 2, 2002, the Company and Mr. Brant entered into a Stock Option
and Right of First Refusal Agreement (the "Option Agreement"). Under the Option
Agreement, Mr. Brant granted the Company a transferable one year option to
purchase 1,820,486 shares of Common Stock owned by Mr. Brant. The option is
exercisable at $.35 per share. The Company is required to exercise the option to
purchase at least 342,857 of such shares by specified dates. On May 3, 2002, the
Company exercised the option to purchase 120,000 of such 342,857 shares. The
certificate representing the shares subject to the option has been deposited
with an escrow agent under an Escrow Agreement dated as of May 3, 2002. To the
extent any portion of the option expires unexercised, the underlying shares will
be subject to a transferable right of first refusal granted by Mr. Brant to the
Company for a 12 month period beginning upon expiration of the option. Under the
Option Agreement, 197,514 other shares of Common Stock were delivered by Mr.
Brant to the Company in satisfaction of amounts owed to Microgy by a company of
which Mr. Brant is a principal in connection with loans by Microgy guaranteed by
Mr. Brant under a June 2001 guaranty. Under the Option Agreement, an additional
753,066 shares owned by Mr. Brant are subject to a 24 month standstill (the
"Standstill") under which Mr. Brant has agreed not to sell them into the public
markets.

The foregoing descriptions of the Option Agreement and Escrow Agreement are
qualified in their entirety by reference to the Option Agreement and Escrow
Agreement, which are attached hereto as Exhibit 6 and 7, respectively, and are
incorporated herein by reference."

Item 5.  Interest in Securities of the Issuer:
         ------------------------------------

         Items 5(a) and 5(c) are amended to read as follows:

         "(a)     Mr. Brant may be deemed to own beneficially 2,435,552 shares
of Common Stock as of May 4, 2002, including 1,682,486 remaining shares subject
to the option in favor of the Company and 753,066 shares subject to the
Standstill under the Option Agreement.

<PAGE>

                                                                 Page 4 of 31

         The shares beneficially owned by Mr. Brant represent 12.2% of the class
based on the 19,934,139 shares of the Company's Common Stock outstanding as of
May 4, 2002. The number of outstanding shares is calculated by subtracting from
the 20,251,653 shares of Common Stock reported to be outstanding as of April 23,
2002 in the Company's Form 10-K/A filed for the period ending December 31, 2001
317,514 shares, consisting of: (1) the 120,000 shares of Common Stock that the
Company purchased from Mr. Brant on May 3, 2002, pursuant to the Option
Agreement and (2) the 197,514 shares of Common Stock which Mr. Brant delivered
to the Company on May 3, 2002, in satisfaction of certain guaranty obligations
as described in Item 4. The 317,514 shares acquired by the Company on May 3,
2002 are being held by the Company as treasury shares and, therefore, are deemed
issued but not outstanding.

         Mr. Brant is a party to the Stockholders' Agreement described in Item
4. Within the meaning of Rule 13(d)(5) under the Securities Exchange Act of
1934, as amended (the "Act"), the terms of the Stockholders' Agreement could be
deemed to provide for an agreement among the parties thereto to act together for
the purpose of voting and disposing of equity securities of the Company.
Accordingly, the parties thereto could be deemed to be members of a "group" and
could be deemed to be beneficial owners of all of the securities held by such
group. Mr. Brant denies the existence of such a group and disclaims beneficial
ownership of the securities held by any other person.

         As of the date hereof, to the best knowledge of Mr. Brant, the table
below identifies all of the parties to the Stockholders' Agreement, in addition
to Mr. Brant and the Company, and states their ownership interests in the
Company as of May 4, 2002, based solely upon public filings.

<PAGE>

                                                                    Page 5 of 31

--------------------------------------------------------------
                                                 Percentage of
                             Common Stock        Common Stock
 Party to Stockholder        Beneficially        Beneficially
    Agreement                  Owned/1/           Owned/1,2/
--------------------------------------------------------------
Joseph E. Cresci              4,725,348               23.7%
--------------------------------------------------------------
Donald A. Livingston          2,461,739               12.3%
--------------------------------------------------------------
George A. Kast                2,823,188               14.2%
--------------------------------------------------------------
Daniel J. Eastman             1,120,882/3/             5.5%
--------------------------------------------------------------
Steven J. Brunner               548,258                2.8%
--------------------------------------------------------------
John P. O'Shea                  135,383                0.7%
--------------------------------------------------------------
Henry S. Krauss                  22,564                0.1%
--------------------------------------------------------------
Frances Luskind and
Henry Krauss, as Trustees
of the Trust U/W/O
Jessie Daniels FBO
Frances Luskind                  22,564                0.1%
--------------------------------------------------------------
Smithson Ventures Inc. Money
Purchase Pension Plan DLJSC-
Custodian FBO Deborah
Salerno Trustee                  45,128                0.2%
--------------------------------------------------------------
Amro International, S.A.         90,255                0.5%
--------------------------------------------------------------
Frank Kramer                     90,255                0.5%
--------------------------------------------------------------
John J. Burke                   451,241                2.3%
--------------------------------------------------------------
Hitel Group                      45,128                0.2%
--------------------------------------------------------------

----------------------------
/1/      Section 13 of the Exchange Act deems a person to be the beneficial
         owner of a security if that person has the right to acquire beneficial
         ownership of such security within 60 days (including through the
         exercise or conversion of another security). Pursuant to Section 13,
         any shares of Common Stock not outstanding which are issuable within 60
         days upon exercise or conversion of securities held by a person have
         been deemed to be outstanding for the purpose of computing the
         percentage of outstanding securities of the class owned by such person
         but have not been deemed to be outstanding for the purpose of computing
         the percentage of the class by any other person.

/2/      Based on the 19,934,139 shares of Common Stock outstanding as of May 4,
         2002 as calculated above in this Item 5(a).

/3/      This includes 389,872 shares of Common Stock which is issuable upon the
         exercise of the Warrant Mr. Eastman received in connection with the
         Exchange Agreement.

<PAGE>

                                                                    Page 6 of 31

         (c)      On May 3, 2002, the Company exercised its option under the
Option Agreement to purchase 120,000 shares of Common Stock owned by Mr. Brant.
Pursuant to the Option Agreement, Mr. Brant also delivered 197,514 shares of
Common Stock to the Company in satisfaction of certain guarantee obligations as
described in Item 4."

Item 7.  Material to be Filed as Exhibits:
         --------------------------------

         Item 7 is hereby amended to add the following at the end thereof:

                  "6.      Stock Option and Right of First Refusal Agreement
                           dated as of May 3, 2002, by and between the Company
                           and Benjamin Brant.

                  7.       Escrow Agreement dated as of May 3, 2002 among the
                           Company, Benjamin Brant and US Bank National
                           Association, as Escrow Agent."

<PAGE>

                                                                    Page 7 of 31

                                  SIGNATURE
                                  ---------

                  After reasonable inquiry to and to the best of the knowledge
and belief of the undersigned, the undersigned certifies that the information
set forth in this statement by or about the undersigned is true, complete and
correct.

                                                  Date May 10, 2002

                                                  /s/ Benjamin Brant
                                                  -----------------------------
                                                  Benjamin Brant

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-6
<SEQUENCE>3
<FILENAME>dex6.txt
<DESCRIPTION>STOCK OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT
<TEXT>
<PAGE>
                                                                    Page 8 of 31

                                                                       Exhibit 6

                STOCK OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT

         THIS STOCK OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT (the
"Agreement") is dated as of May 2, 2002, by and between Environmental Power
Corporation, a Delaware corporation ("EPC"), and Benjamin J. Brant (the
"Stockholder").

         WHEREAS, the Stockholder owns beneficially and of record 2,753,066
shares, par value $0.01 per share, of common stock (the "Common Stock") of EPC
consisting of (i) 1,802,486 shares currently represented by Certificate No. 7629
(the "Option Shares"), (ii) 197,514 shares currently represented by Certificate
No. 7631 (the "Guaranty Shares") and (iii) 753,066 shares currently represented
by certificate No. 7630 (the "Standstill Shares" and, together with the Option
Shares, the ROFR Shares (as hereinafter defined) and the Guaranty Shares, the
"Shares");

         WHEREAS, the Shares are "restricted securities" under applicable
securities laws not capable of being resold by the Stockholder in the absence of
(i) the effectiveness of the Company's registration statement on Form S-2 filed
on April 1, 2002 contemplated by the Registration Rights Agreement dated as of
July 23, 2001 (the "Registration Rights Agreement"), (ii) an exemption from
registration becoming available or (iii) inclusion in an effective registration
contemplated by Section 2(c) of the Registration Rights Agreement;

         WHEREAS, the Common Stock has been the subject of limited trading
volume on the OTC Bulletin Board;

         WHEREAS, in light of the foregoing, the Stockholder desires to provide
for, and the Company desires to agree to, the option to purchase Option Shares,
and minimum required repurchases by the Company thereunder, at fixed prices as
provided herein;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained
herein, the parties hereby agree as follows:

         1.       The Option; Minimum Purchase. The Stockholder hereby agrees as
                  ----------------------------
follows:

                  (a)     Grant of Option. Subject to the terms of this Section
                          ---------------
1, the Stockholder hereby grants to EPC (or its designee or designees from time
to time), an irrevocable option (the "Option") to purchase all or any part of
the Option Shares at a purchase price per Option Share equal to $0.35.

                  (b)     Escrow of Option Share Certificate. Concurrently with
                          ----------------------------------
the execution of this Agreement (i) the parties are entering into an escrow
agreement in the form of Exhibit A hereto (the "Escrow Agreement") with U.S.
Bank Trust National Association, as escrow agent (the "Escrow Agent") and (ii)
the Stockholder is depositing with the Escrow Agent the certificate representing
the Option Shares, together with

<PAGE>
                                                                    Page 9 of 31

fifteen stock powers duly endorsed in blank.  The Stockholder shall deliver to
the Escrow Agent additional stock powers as reasonably requested by EPC form
time to time.

                  (c)     Exercise of Option. Unless the Option is sooner
                          ------------------
terminated as provided herein, EPC and/or its designee(s) may exercise the
Option, in whole or in part, at any time and from time to time, during the
period (the "Exercise Period") ending on April 30, 2003 (the "Expiration Date").
Following each exercise, the Option shall remain available for future exercise
with respect to the remaining Option Shares through the close of business on the
Expiration Date.

                  (d)     Manner of Exercise. To exercise the Option, EPC (or
                          ------------------
its designee(s), as the case may be) shall, prior to the close of business on
the Expiration Date, give written notice (each, an "Exercise Notice") to the
Escrow Agent and the Stockholder specifying the number of Option Shares it is
purchasing and EPC (or its designees) shall pay, by check or wire transfer to
the Escrow Agent an amount equal to the product of (x) $0.35 and (y) the number
of Option Shares being purchased. Upon receipt of the Exercise Notice and
purchase price, the Escrow Agent shall deliver the certificate representing the
Option Shares to EPC's transfer agent (American Stock Transfer & Trust Co., 40
Wall Street, New York, NY 10005, Attn: Karen Lazar/Mark Smith) (the "Transfer
Agent"), accompanied by an executed stock power deposited by the Stockholder,
which shall be dated and completed by the Escrow Agent, together with
instructions to the transfer agent to deliver a new certificate for the Option
Shares being purchased to EPC (or its designee(s), as the case may be) and to
deliver a new certificate registered in the name of the Stockholder for the
balance of the Option Shares to the Escrow Agent. Such new certificates shall
bear the same restrictive legends as the certificate submitted to the transfer
agent, except that the certificate issued to EPC or its designee(s) shall not
bear the legend provided for in Section 7(b) below. Promptly after submitting
the stock certificate and power and instruction letter to the transfer agent,
the Escrow Agent shall remit the purchase price received from EPC to the
Stockholder. Promptly following the Expiration Date and the processing of any
Option exercise made prior to the close of business on the Expiration Date, the
Transfer Agent shall deliver the certificate for any unpurchased Option Shares
to the Stockholder.

                  (e)     Transferability of Option. EPC may sell or transfer
                          -------------------------
the Option (or any portion thereof) and any Shares acquired upon exercise of the
Option at any time, without the written consent of the Stockholder, to a third
party or any affiliate or affiliates of EPC; provided, that no such transfer
shall relieve EPC of its obligations hereunder (it being understood that
exercises by a transferee shall count towards the minimum purchases under
Section 1(f) below) and provided further that the transferee shall agree in
writing to be bound by the provisions of this Agreement applicable to the Option
(or portion thereof) assigned.

                  (f)     Minimum Purchase. On or before the last business day
                          ----------------
of each month set forth below EPC shall be required to have purchased (and/or
arranged for its designee(s) to purchase), by exercise of the Option, on a
cumulative basis, the following number of Option Shares:

                                      2

<PAGE>
                                                                   Page 10 of 31

<TABLE>
<CAPTION>
         Date                                          Cumulative Minimum Option Shares
         ----                                          --------------------------------
<S>                                                 <C>
April 2002                                          120,000

May 2002                                            140,260

June 2002                                           160,520

July 2002                                           180,780

August 2002                                         201,040

September 2002                                      221,300

October 2002                                        241,560

November 2002                                       261,820

December 2002                                       282,080

January 2003                                        302,340

February 2003                                       322,600

March 2003                                          342,857
</TABLE>

Notwithstanding the foregoing, in the event the Option Shares and stock powers
are not delivered to the Escrow Agent (or directly to the Transfer Agent if the
parties agree to arrange for the initial exercise in that manner) by April 30,
2002, the initial date set forth in the table above shall be delayed until the
business day after delivery and receipt thereof is confirmed to EPC. Therefore
for example, if EPC purchased 120,000 Option Shares in April 2002 and 50,000
Option Shares in May 2002 (i.e. 170,000 Option Shares on a cumulative basis), it
would not be required to purchase additional Option Shares until the last
business day in July, when it would be required to purchase a minimum of 10,780
Option Shares.

         In the event EPC defaults in the purchase of the cumulative minimum
purchase requirements set forth above (by not making timely payments to the
Escrow Agent) and such default continues for five (5) business days after
written notice by Stockholder to EPC and the Escrow Agent of such default, the
parties shall instruct the Escrow Agent to return the escrowed stock certificate
and all other escrow deposits to the Stockholder and, without limitation of the
Stockholder's rights and remedies, the Option for any remaining Option Shares
shall terminate. In such event, such shares shall be free of the legend provided
in Section 7 below and not subject to any restrictions under this Agreement.

         (g)      Guaranteed Obligations. The parties agree that 197,514 of the
                  ----------------------
Option Shares shall be transferred by the Stockholder to the Company
concurrently with execution of this Agreement to satisfy the Stockholder's
guaranty, under a Guaranty

                                      3

<PAGE>
                                                                   Page 11 of 31

Agreement dated June 14, 2001, with respect to $69,129.92 of principal and
interest payments due from Integrated Information Utility Systems ("I2US") to
Microgy Cogeneration Systems, Inc. ("Microgy") on loans made by Microgy to I2US.
All other obligations of Stockholder under the Guaranty Agreement, including
indemnification obligations, shall remain in full force and effect.

         2.       Right of First Refusal. In the event (i) any Option Shares
                  ----------------------
remain unpurchased by EPC (and/or its designees) as of the end of the Exercise
Period and (ii) the Option has not terminated prematurely as a result of an
uncured default in accordance with the last paragraph of Section 1(f) above, any
Option Shares remaining unpurchased shall be deemed to be "ROFR Shares" subject
to this Section 2. In the event that at any time after the Expiration Date of
the Option and prior to the twenty-four (24) month anniversary of this Agreement
the Stockholder should decide to sell or otherwise dispose of any of the ROFR
Shares, it shall first give written notice to EPC of its intention to sell such
ROFR Shares, together with the price at which it is willing to sell such Shares.
EPC shall then have fifteen (15) days from the date it receives such notice to
evaluate such offer. If, at or prior to the end of such 15-day period, EPC gives
notice to the Stockholder that it accepts such offer, then the Stockholder
shall, within fifteen (15) days of receipt of such notice, sell to EPC, and EPC
shall purchase for cash, all such ROFR Shares. If, at the end of such 15-day
period, EPC declines such offer or does not respond to such offer in writing,
then the Stockholder shall be free to sell such Shares at any time during the
succeeding fifteen (15) days (starting the day following the end of the previous
15-day period) to a third party or through the trading market, but only at a
price per share equal to or higher than 100% of the price per share at which
such Shares were first offered to EPC and only in compliance with the
Stockholders Agreement; provided, however, that if market conditions have
changed adversely during the 15-day period during which EPC had to evaluate the
offer or during the succeeding 15-day period, the reference in this sentence to
100% shall be reduced to such percentage, not lower than 90%, as is commensurate
with the change in market conditions. If the Stockholder does not complete the
sale of such Shares in such manner during such 15-day period, then the Right of
First Offer described in this Section 2 shall again be applicable. The
Stockholder shall provide EPC with such information and documentation as EPC
reasonably requests from time to time to verify compliance with this Section 2.

         3.       Standstill Shares; Standstill on Future Public Market Sales.
                  -----------------------------------------------------------
Until the twenty-four (24) month anniversary of this Agreement, or such earlier
date as the Option is terminated prematurely as a result of an uncured default
in accordance with the last paragraph of Section 1(f) above, Stockholder agrees
not to sell any of the Standstill Shares into a public market (including the
over the counter market). Such standstill shall terminate if EPC sells all or
substantially all of its assets to a third party. This Section 3 shall not
prevent or restrict private sales or dispositions of the Standstill Shares not
involving use of a public market, which private transactions comply with
applicable securities laws. Pledges of the Standstill Shares shall only be
permitted if the pledgee agrees in writing with EPC to comply with the
provisions of this Section 3 in connection with any sale or disposition of the
Standstill Shares it makes or arranges.

                                      4

<PAGE>
                                                                   Page 12 of 31

         4.       Covenants, Representations and Warranties. The Stockholder
                  -----------------------------------------
hereby represents and warrants to EPC as follows:

                  (a)     Ownership of Shares. Stockholder is the record and
                          -------------------
beneficial owner of the number of shares of Common Stock described in the
whereas clauses of this Agreement. On the date hereof, the Shares described in
the whereas clauses of this Agreement constitute all of the shares of Common
Stock owned of record or beneficially by the Stockholder. The Stockholder owns
the Shares free and clear of all liens, claims, charges, security interests,
mortgages or other encumbrances, and the Shares are subject to no rights of
first refusal, put rights, other rights to purchase or encumber the Shares, or
to any agreements other than this Agreement and a Stockholders Agreement among
EPC and certain of its stockholders dated as of July 23, 2001 (the "Stockholders
Agreement") as to the encumbrance or disposition of the Shares. The Shares are
duly and validly issued, fully paid and non-assessable. The Stockholder has sole
power of disposition and sole power to agree to all of the matters set forth in
this Agreement, in each case with respect to all of the Shares, with no
limitations, qualifications or restrictions on such rights.

                  (b)     Power; Binding Agreement. The Stockholder has the
                          ------------------------
legal capacity, power and authority to enter into and perform all of the
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, shareholder agreement or voting trust. This Agreement has
been duly and validly executed and delivered by the Stockholder and constitutes
a valid and binding agreement of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity). There is
no beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Stockholder is trustee who is not a party to this Agreement
and whose consent is required for the execution and delivery of this Agreement
or the consummation by the Stockholder of the transactions contemplated hereby.
If the Stockholder is married and the Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and constitute a
valid and binding agreement of, the Stockholder's spouse, enforceable against
such person in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity).

                  (c)     No Conflicts. (i) No filing with, and no permit,
                          ------------
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by the Stockholder
and the consummation by the

                                      5

<PAGE>
                                                                   Page 13 of 31

Stockholder of the transactions contemplated hereby and (ii) none of the
execution or delivery of this Agreement by the Stockholder, the consummation by
the Stockholder of the transactions contemplated hereby or compliance by the
Stockholder with any of the provisions hereof shall (A) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Stockholder is a party or by which the
Stockholder or, to the best of the Stockholder's knowledge, any of the
Stockholder's properties or assets may be bound, or (B) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Stockholder or any of the Stockholder's properties or assets.

                  (d)     No Finder's Fees. No broker, investment banker,
                          ----------------
financial adviser or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Stockholder.

                  (e)     Restriction on Transfer, Proxies and Non-Interference.
                          -----------------------------------------------------
For so long as this Agreement remains in effect, the Stockholder shall not,
directly or indirectly: (i) except as contemplated or permitted by this
Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Shares or any interest therein; (ii) grant any proxies or powers of
attorney, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of the Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling the Stockholder from
performing the Stockholder's obligations under this Agreement.

                  (f)     Information; Accredited Investor.
                          --------------------------------

                                    (i)     The Stockholder, as a Director of
EPC and recent officer of Microgy, is knowledgeable concerning the business and
affairs of EPC. The Stockholder confirms that EPC made available to such
Stockholder, and his representatives and agents, (A) any requested information
about EPC, (B) the opportunity to ask questions of the officers and employees of
EPC and (C) the opportunity to acquire such additional information about the
business and financial condition of EPC as the Stockholder has requested, and
such information has been received.

                                    (ii)    The Stockholder was, at the time of
its purchase of the Shares, and currently is an "accredited investor" within the
meaning of Regulation D under the Securities Act.

                                      6

<PAGE>
                                                                   Page 14 of 31

                  (g)     Reliance by EPC. The Stockholder understands and
                          ---------------
acknowledges that EPC is relying upon the foregoing representations by the
Stockholder, (i) in entering into this Agreement and (ii) in purchasing Shares
hereunder.

         5.       Further Assurances. From time to time, at the other party's
                  ------------------
reasonable request and without further consideration, each party agrees to
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.

         6.       Failure to Deliver Shares. If the Stockholder becomes
                  -------------------------
obligated to sell any Shares to EPC under this Agreement and fails to deliver
such Shares in accordance with the terms of this Agreement, EPC may, at its
option, in addition to all other remedies it may have, send to the Stockholder
the purchase price for such Shares as is herein specified. Thereupon, EPC upon
written notice to the Stockholder, (a) shall cancel on its books the certificate
or certificates representing the Shares to be sold and (b) shall issue, in lieu
thereof, in the name of EPC or its designee(s), as the case may be, a new
certificate or certificates representing such Shares, and thereupon all of the
Stockholder's rights in and to such Shares shall terminate.

         7.       Stop Transfer; Form of Legend.
                  -----------------------------

                  (a)     The Stockholder agrees with, and covenants to, EPC
that the Stockholder shall not request that EPC register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Common Stock, by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the terms "Option
Shares," "ROFR Shares," "Standstill Shares" and "Shares" shall be deemed to
refer to and include the Option Shares, ROFR Shares, Standstill Shares and/or
Shares, as the case may be, as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Option
Shares, ROFR Shares and/or Shares may be changed or exchanged.

                  (b)     All certificates representing any of the Shares shall
contain the following legend (in addition to any other legend required by law,
the Stockholders Agreement or any other contract):

                  "The securities represented by this certificate are subject to
                  certain restrictions on transfer and other terms of a Stock
                  Option and Right of First Refusal Agreement, dated as of April
                  29, 2002, between Environmental Power Corporation and Benjamin
                  J. Brant, a copy of which is on file in the principal office
                  of Environmental Power Corporation.

                                      7

<PAGE>
                                                                   Page 15 of 31

         8.       Prohibition. To the extent that EPC is prohibited (at any time
                  -----------
scheduled for a purchase of Option Shares) under applicable law or regulation
from purchasing the Option Shares, EPC shall promptly so notify the Stockholder
and, shall be entitled to suspend its performance hereunder until EPC is no
longer prohibited from performing, at which time EPC shall promptly act to bring
its performance up to date. If the prohibition on EPC's performance lasts for
more than 180 days, then either party may, by written notice to the other,
terminate this Agreement (other than the provisions of Sections 9, 10 and 11,
which shall survive termination).

         9.       Covenant Not to Compete; Non-Solicitation.
                  -----------------------------------------

                  (a)     From the date hereof until six (6) months after the
date of termination of his ownership of Shares (the "Restriction Period"), the
Stockholder covenants and agrees with EPC that he will not compete, or render
any services to or become interested in (as a partner, proprietor, shareholder
(except as a no more than 2% shareholder in a public company), principal,
employee, consultant, officer, director, manager or member) any natural or
corporeal Person or business which competes, either directly or indirectly, with
EPC or Microgy in the business of providing services, technology, research or
development relating to the production of energy through anaerobic digestion or
any other technology utilized or being developed by Microgy and listed in
Schedule 4.15 to the Share Exchange Agreement dated as of June 20, 2001 (the
-------------
"Exchange Agreement") among EPC, Microgy, the Stockholder and the other
Principal Microgy Stockholders referred to therein. During the Restriction
Period, the Stockholder agrees that he shall not make any contracts with or
otherwise deal with any persons, whether natural or corporeal, who have been
introduced to the Stockholder by Microgy or as a result of such Person's
activities on behalf of or involving Microgy.

                  (b)     During the Restriction Period, the Stockholder
covenants and agrees with EPC that he will not, either directly or indirectly,
(A) hire, solicit or encourage any employee to leave the employment of EPC,
Microgy or any Microgy subsidiary, or (B) induce or attempt to induce any
customer, client, supplier, licensor, licensee or other business relation of
EPC, Microgy or any Microgy subsidiary to enter into a business relationship
with the Stockholder or any affiliate thereof.

                  (c)     The Stockholder acknowledges and agrees that he will
receive a direct, material and substantial benefit from the consummation of the
transactions contemplated by this Agreement and that such direct, material and
substantial benefit is good and sufficient consideration to him for the
performance of his respective obligations under this Section 8.

                  (d)     The Stockholder recognizes and acknowledges that this
Section 9 is necessary in order to protect and maintain the proprietary
interests and other legitimate business interests of EPC and Microgy and is a
material inducement to EPC entering into this Agreement and that Section 9
hereof is reasonable in all respects.

                  (e)     The parties hereto agree that the obligations
contained in this Section 9 are of a special and unique character which gives
them a peculiar value, and

                                      8

<PAGE>

                                                                   Page 16 of 31


that EPC and Microgy may not be reasonably or adequately compensated in damages
in an action at law in the event that the Stockholder breaches such obligations.
The Stockholder, therefore, expressly agrees that EPC and Microgy shall be
entitled to preliminary and permanent injunctive and other equitable relief to
prevent a breach of said obligations, in addition to any other rights and
remedies that EPC or Microgy may have.

         10.      Confidentiality. The Stockholder hereby confirms and agrees to
                  ---------------
be bound by the confidentiality obligations contained in Section 9.5(a) of the
Exchange Agreement. Furthermore, the Stockholder agrees not to disclose any
information concerning this Agreement to any person, except his attorneys,
accountants, tax advisors or similar advisors or to a prospective purchaser of
the ROFR Shares or Standstill Shares or as may be required by law, including
applicable securities laws.

         11.      Miscellaneous.
                  -------------

                  (a)     Entire Agreement. This Agreement constitutes the
                          ----------------
entire agreement between the parties with respect to the subject matter hereof
and supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
Notwithstanding anything to the contrary contained herein, the Exchange
Agreement, the Stockholders Agreement and the Registration Rights Agreement
shall remain in full force and effect.

                  (b)     Certain Events. The Stockholder agrees that this
                          --------------
Agreement and the obligations hereunder shall attach to the Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, the Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.

                  (c)     Assignment. Except as expressly permitted herein, this
                          ----------
Agreement shall not be assigned by operation of law or otherwise without the
prior written consent of the other party, provided that EPC may assign, in its
sole discretion, its rights and obligations hereunder to any direct or indirect
wholly-owned subsidiary of EPC, but no such assignment shall relieve EPC of its
obligations hereunder if such assignee does not perform such obligations.

                  (d)     Amendments, Waivers, Etc. This Agreement may not be
                          ------------------------
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.

                  (e)     Notices. All notices, requests, claims, demands and
                          -------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by hand delivery, telecopy
(confirmed by a copy mailed as provided below), or by mail (registered or
certified mail, postage prepaid, return receipt requested) or by any courier
service, such as Federal Express, providing

                                      9

<PAGE>

                                                                   Page 17 of 31

proof of delivery. Notices shall be deemed given when received. All
communications hereunder shall be addressed to the respective parties at the
following addresses:

<TABLE>
<CAPTION>
<S>                                            <C>
If to the Stockholder:                         Benjamin J. Brant
                                               7553 S. Gartner Road
                                               Evergreen, CO   80439
                                               Facsimile:  (303) 384-0020

If to EPC:                                     Environmental Power Corporation
                                               1 Cate Street, 4th Floor
                                               Portsmouth, NH  03801
                                               Attention:  President
                                               Telephone:  (603) 431-1780
                                               Facsimile:  (603) 431-2650

with a copy to:                                Dorsey & Whitney LLP
                                               250 Park Avenue
                                               New York, NY  10017
                                               Telephone:  (212) 415-9200
                                               Facsimile:  (212) 953-7201
                                               Attention:  Steven I. Himelstein, Esq.
</TABLE>

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

                  (f)     Severability. Whenever possible, each provision or
                          ------------
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.

                  (g)     Specific Performance. Each of the parties hereto
                          --------------------
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party (including any designee of EPC hereunder) shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.

                  (h)     Remedies Cumulative. All rights, powers and remedies
                          -------------------
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not

                                      10

<PAGE>

                                                                   Page 18 of 31

preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.

                  (i)     No Waiver. The failure of any party hereto to exercise
                          ---------
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.

                  (j)     No Third Party Beneficiaries. This Agreement is not
                          ----------------------------
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto (other than a designee or permitted
assignee of EPC or Microgy).

                  (k)     Governing Law. This Agreement shall be governed and
                          -------------
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of laws thereof.

                  (l)     Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES
                          --------------------
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

                  (m)     Descriptive Headings. The descriptive headings used
                          --------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.

                  (n)     Counterparts. This Agreement may be executed in
                          ------------
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement. Signature of either
party transmitted by facsimile shall constitute effective execution and be
deemed to be its original signature.

                                      11

<PAGE>

                                                                   Page 19 of 31

         IN WITNESS WHEREOF, EPC has caused this Agreement to be duly executed,
and the Stockholder has duly executed this Agreement, as of the day and year
first above written.

                                                 ENVIRONMENTAL POWER CORPORATION

                                                 By:   _________________________
                                                       Name:
                                                       Title:

                                                 _______________________________
                                                          Benjamin J. Brant

                                      12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-7
<SEQUENCE>4
<FILENAME>dex7.txt
<DESCRIPTION>ESCROW AGREEMENT
<TEXT>
<PAGE>

                                                                   Page 20 of 31

                                                                       Exhibit 7

                                ESCROW AGREEMENT

         Pursuant to this Escrow Agreement (this "Agreement"), dated May 3,
2002, Environmental Power Corporation, a Delaware corporation ("EPC"), and
Benjamin J. Brant ("Brant" and together with EPC, the "Depositors") hereby
establish Escrow Account No. 77095040 (the "Account") with U.S. Bank Trust
National Association, a national banking association (the "Agent"), to be
maintained and administered in accordance with the following terms and
conditions:

         The EPC securities and stock powers described on Schedule I attached
hereto and incorporated herein (together with any funds paid to the Agent by EPC
or its designees to purchase securities in the Account and any interest earned
thereon, the "Assets") will be deposited in the Account upon delivery thereof to
the Agent at its office in New York, New York, in the manner and at the time(s)
specified in the said Schedule I. The Agent is hereby authorized and directed by
each of the Depositors, as their escrow agent, to hold, deal with and dispose of
the Assets as provided in the instructions set forth in Schedule II attached
hereto and incorporated herein; subject, however, to the terms and conditions
set forth below, which, in all events, shall govern and control over any
contrary or inconsistent provisions contained in Schedules I or II attached
hereto.

         1.       Agent's Duties. Agent's duties and responsibilities shall be
                  --------------
limited to those expressly set forth in this Agreement, and Agent shall not be
subject to, or obliged to recognize, any other agreement between any or all of
the Depositors or any other persons even though reference thereto may be made
herein; provided, however, this Agreement may be amended at any time or times by
an instrument in writing signed by all the parties hereto. Agent shall not be
subject to or obligated to recognize any notice, direction or instruction of any
or all of the parties hereto or of any other person, except as expressly
provided for and authorized in Schedule II and in performing any duties under
this Agreement, Agent shall not be liable to any party for consequential
damages, (including, without limitation lost profits) losses, or expenses,
except for gross negligence or willful misconduct on the part of the Agent.

         2.       Court Orders or Process. If any controversy arises between the
                  -----------------------
Depositors to this Agreement, or with any other party, concerning the subject
matter of this Agreement, its terms or conditions, Agent will not be required to
determine the controversy or to take any action regarding it. Agent may hold all
documents and funds and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in Agent's discretion, Agent
may require, despite what may be set forth elsewhere in this Agreement. In such
event, Agent will not be liable for interest or damage. Agent is authorized, in
its sole discretion, to comply with orders issued or process entered by any
court with respect to the Account, the Assets or this Escrow Agreement, without
determination by the Agent of such court's jurisdiction in matter. If any Assets
are at any time attached, garnished, or levied upon under any court order, or in
case the payment, assignment, transfer, conveyance or delivery of any such
property shall be stayed or enjoined by any court order, or in case any order,
judgment or decree shall be made or entered by any court affecting such property
or any part thereof, then in any such events Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel of its own choosing is binding upon
it; and if Agent complies with any such order, writ, judgment or decree, it
shall not be liable to any of the

<PAGE>

                                                                   Page 21 of 31

Depositors or to any other person, firm or corporation by reason of such
compliance even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside or vacated.

         3.       Agent's Actions and Reliance. Agent shall not be personally
                  ----------------------------
liable for any act taken or omitted by it hereunder if taken or omitted by it in
good faith and in the exercise of its own best judgment. Agent shall also be
fully protected in relying upon any written notice, instruction, direction,
certificate or document which in good faith it believes to be genuine.

         4.       Collections. Unless otherwise specifically indicated in
                  -----------
Schedule II, Agent shall proceed as soon as practicable to collect any checks,
interest due, matured principal or other collection items with respect to Assets
at any time deposited in the Account. All such collections shall be subject to
the usual collection procedures regarding items received by Agent for deposit or
collection. Agent shall not be responsible for any collections with respect to
Account Assets if Agent is not registered as record owner thereof or otherwise
is not entitled to request or receive payment thereof as a matter of legal or
contractual right. All collection payments shall be deposited to the Account,
except as otherwise provided in Schedule II. Agent shall not be required or have
a duty to notify anyone of any payment or maturity under the terms of any
instrument, security or obligation deposited in the Account, nor to take any
legal action to enforce payment of any check, instrument or other security
deposited in the Account. The Account is a safekeeping escrow account, and no
interest shall be paid by Agent on any money deposited or held therein, except
as provided in Section 6 hereof.

         5.       Agent Responsibility. Agent shall not be responsible or liable
                  --------------------
for the sufficiency or accuracy of the form, execution, validity or genuineness
of documents, instruments or securities now or hereafter deposited in the
Account, or of any endorsement thereon, or for any lack of endorsement thereon,
or for any description therein. Registered ownership of or other legal title to
Assets deposited in the Account shall be maintained in the name of Agent, or its
nominee, only if expressly provided in Schedule II. Agent may maintain
qualifying Assets in a Federal Reserve Bank or in any registered clearing agency
(including, without limitation, the Depository Trust Company) as Agent may
select, and may register such deposited Assets in the name of Agent or its agent
or nominee on the records of such Federal Reserve Bank or such registered
clearing agency or a nominee of either. Agent shall not be responsible or liable
in any respect on account of the identity, authority or rights of the persons
executing or delivering or purporting to execute or deliver any such document,
security or endorsement or this Agreement.

         6.       Investments. All monies held in the Account shall be invested
                  -----------
by Agent in its name or its nominee's name, in such instruments or securities
and at the written direction of the such Depositor, as expressly authorized in
Schedule II. Such Depositor shall furnish the Agent with written instructions to
sell securities (including shares or units in any money market mutual funds) to
make any payments from the Account as provided hereunder. If no such
instructions are received, Agent is authorized to sell any such securities held
in the Account as necessary for that purpose. Agent shall not be responsible for
the selection, quality or maturity of such investments, or for the timely
reinvestment of interest or maturity proceeds thereof except as provided in the
immediately following paragraph.

         In the absence of duly authorized and complete directions regarding
investment of cash held in the Account, Agent shall automatically invest and
reinvest the same in units of the money

                                      2

<PAGE>

                                                                   Page 22 of 31

market mutual funds identified on Schedule III attached hereto and incorporated
herein, which funds may be managed by an affiliate of the Agent.

         Monies credited to any account or fund maintained hereunder which are
uninvested pending disbursement or receipt of proper investment directions or as
directed herein, may be deposited to and held in a non-interest bearing demand
deposit account established with the Commercial Banking Department of the Agent
or with any bank affiliated with the Agent, without the pledge of securities to
or other collateralization of such deposit accounts.

         The Depositors acknowledge and agree that the Agent is authorized to
invest from or through its trust department or any other bank affiliated with
Agent through common control by U.S. Bancorp.

         7.       Notices/Directions to Agent. Notices and directions to Agent
                  ---------------------------
from Depositors, or from other persons authorized to give such notices or
directions as expressly set forth in Schedule II, shall be in writing and signed
by an authorized representative as identified pursuant to Schedule II, and shall
not be deemed to be given until actually received by Agent's employee or officer
who administers the Account. Agent shall not be responsible or liable for the
authenticity or accuracy of notices or directions properly given hereunder if
the written form and execution thereof on its face purports to satisfy the
requirements applicable thereto as set forth in Schedule II, as determined by
Agent in good faith without additional confirmation or investigation.

         8.       Books and Records. Agent shall maintain books and records
                  -----------------
regarding its administration of the Account, and the deposit, investment,
collections and disbursement or transfer of Assets, shall retain copies of all
written notices and directions sent or received by it in the performance of its
duties hereunder, and shall afford each Depositor reasonable access, during
regular business hours, to review and make photocopies (at Depositor's cost) of
the same.

         9.       Disputes Among Depositors and/or Third Parties. In the event
                  ----------------------------------------------
Agent is notified of any dispute, disagreement or legal action between or among
any of the Depositors, and/or any third parties, relating to or arising in
connection with the Account, the Assets or the performance of the Agent's duties
under this Agreement, the Agent shall be authorized and entitled, subject to
Section 2 hereof, to suspend further performance hereunder, to retain and hold
the Assets then in the Account and take no further action with respect thereto
until the matter has been fully resolved, as evidenced by written notification
signed by all Depositors and any other parties to such dispute, disagreement or
legal action.

         10.      Notice by Agent. Any notices which Agent is required or
                  ---------------
desires to give hereunder to any of the Depositors shall be in writing and may
be given by mailing the same to the address indicated below opposite the
signature of such Depositor (or to such other address as said Depositor may have
theretofore substituted therefor by written notification to Agent), by United
States certified or registered mail, postage prepaid. For all purposes hereof
any notice so mailed shall be as effectual as though served upon the person of
the Depositor to whom it was mailed at the time it is deposited in the United
States mail by Agent whether or not such undersigned thereafter actually
receives such notice. Whenever under the terms hereof the time for Agent's
giving a notice or performing an act falls upon a Saturday, Sunday, or holiday,
such time shall be extended to the next business day.

                                      3

<PAGE>

                                                                   Page 23 of 31

         11.      Legal Counsel. If Agent believes it to be reasonably necessary
                  -------------
to consult with counsel concerning any of its duties in connection with the
account or this Agreement, or in case Agent becomes involved in litigation on
account of being escrow agent hereunder or on account of having received
property subject hereto, then in either case, its costs, expenses, and
reasonable attorney's fees shall be paid one-half by each Depositor.

         12.      Agent Compensation. Agent shall be paid a fee for its services
                  ------------------
as set forth on Schedule IV attached hereto and incorporated herein, which shall
be subject to increase upon notice sent to Depositors, and reimbursed for its
reasonable costs and expenses incurred. If Agent's fees, or reasonable costs or
expenses, provided for herein, are not promptly paid, Agent shall have the right
to sell such portion of the Assets held in the Account as necessary and
reimburse itself therefor from the proceeds of such sale or from the cash held
in the Account. In the event that the conditions of this Agreement are not
promptly fulfilled, or if Agent renders any service not provided for in this
Agreement, or if the Depositors request a substantial modification of its terms,
or if any controversy arises, or if Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, including allocated costs of in-house counsel, and
expenses occasioned by such default, delay, controversy or litigation and Agent
shall have the right to retain all documents and/or other things of value at any
time held by Agent in this escrow until such compensation, fees, costs, and
expenses are paid. The Depositors jointly and severally promise to pay these
sums upon demand. The Depositors shall be jointly and severally liable to pay
all Agent's usual charges and Agent may deduct such sums from the funds
deposited. As between themselves, the Depositors shall each be responsible for
one-half of such charges. The Depositors and their respective successors and
assigns agree jointly and severally to indemnify and hold Agent harmless against
any and all losses, claims, damages, liabilities, and expenses, including
reasonable costs of investigation, counsel fees, including allocated costs of
in-house counsel and disbursements that may be imposed on Agent or incurred by
Agent in connection with the performance of his/her duties under this Agreement,
including but not limited to any litigation arising from this Agreement or
involving its subject matter. Agent shall have a first lien on the property and
papers held under this Agreement for such compensation and expenses.

         13.      Agent Resignation. It is understood that Agent reserves the
                  -----------------
right to resign at any time by giving written notice of its resignation,
specifying the effective date thereof, to the Depositors. Within 30 days after
receiving the aforesaid notice, the Depositors agree to appoint a successor
escrow agent to which Agent may transfer the Assets then held in the Account,
less its unpaid fees, costs and expenses. If a successor escrow agent has not
been appointed and has not accepted such appointment by the end of the 30-day
period, Agent may apply to a court of competent jurisdiction for the appointment
of a successor escrow agent, and the costs, expenses and reasonable attorney's
fees which Agent incurs in connection with such a proceeding shall be paid by
the Depositors.

         14.      Notices. All notices, demands and other communications to be
                  -------
given or delivered under or by reason of the provisions of this Agreement will
be in writing and personally delivered, delivered by courier, mailed by first
class mail, return receipt requested, or sent by facsimile (with such facsimile
followed by mailing first class mail). Notices, demands and communications to
the parties will, unless another address is specified in writing, be sent to the
address indicated below or to such other place and with such other copies as any
party may designate as to itself by written notice to the others:

                                      4

<PAGE>

                                                                   Page 24 of 31

         Notices to Brant:

                        Benjamin J. Brant
                        7553 S. Gartner Road
                        Evergreen, CO  80439
                        Facsimile No. (303) 384-0020

         Notices to EPC:

                        Environmental Power Corporation
                        One Cate Street, 4th Floor
                        Portsmouth, NH  03801
                        Attention:  Donald A. Livingston
                        Facsimile No. (603) 431-2650

         With a copy to:

                        Dorsey & Whitney LLP
                        250 Park Avenue
                        New York, NY 10177
                        Attention:  Steven I. Himelstein, Esq.
                        Facsimile No. (212) 953-7201

         Notices to Agent:

                        US Bank
                        Corporate Trust Services
                        100 Wall Street, 16th Floor
                        New York, NY  10005
                        Attn:  Adam Berman
                        Facsimile No. (212) 509-3384

All such notices, requests, instructions, documents and other communications
will (i) if delivered personally or by courier, be deemed given upon delivery,
(ii) if delivered by facsimile transmission, be deemed given upon receipt, and
(iii) if delivered by mail in the manner described above, be deemed given upon
receipt.

         15.      Governing Law.  This Escrow Agreement shall be construed,
                  -------------
enforced, and administered in accordance with the laws of the State of New York.

         The Agent hereby agrees to hold, deal with and dispose of the Assets at
any time deposited to the Account in accordance with the foregoing Escrow
Agreement.

         16.      Automatic Succession. Any company into which the Agent may be
                  --------------------
merged or with which it may be consolidated, or any company to whom Agent may
transfer a substantial amount of its Escrow business, shall be the Successor to
the Agent without the execution or

                                      5

<PAGE>

                                                                   Page 25 of 31

filing of any paper or any further act on the part of any of the Parties,
anything herein to the contrary notwithstanding.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                            ENVIRONMENTAL POWER CORPORATION

                                            By: ________________________________
                                                Donald A. Livingston,
                                                President:

                                            By: ________________________________
                                                Benjamin J. Brant

                                            U.S. BANK TRUST NATIONAL
                                            ASSOCIATION, as Agent

                                            By: ________________________________
                                                Name:
                                                Title:

                                      6

<PAGE>

                                                                   Page 26 of 31

                                  SCHEDULE I
                                  ----------

                              DELIVERY OF ASSETS
                              ------------------

<TABLE>
<CAPTION>
Description of Assets                       Means of Delivery          Date of Delivery
---------------------                       -----------------          ----------------
<S>                                         <C>                        <C>
Certificate No. 7629 representing           Physical delivery          May, 2002
1,802,486 shares of EPC Common Stock
(the "Option Shares"), together with
fifteen (15) stock powers, executed in
blank by Brant
</TABLE>

<PAGE>

                                                                   Page 27 of 31

                                   SCHEDULE II
                                   -----------

                           INSTRUCTIONS OF DEPOSITORS
                           --------------------------

In connection with the Option Agreement, dated as of May 2, 2002, made and
entered into by and between EPC and Brant (the "Option Agreement"), the Agent
shall disburse the Assets:

..    to exercise its Option under the Option Agreement, EPC (or its designee(s),
     as the case may be) shall, prior to the close of business on April 30, 2003
     (the "Expiration Date") give written notice substantially in the form of
     Annex A hereto (each, an "Exercise Notice") to the Agent and Brant
     specifying the number of Option Shares it is purchasing and EPC (or its
     designees) shall pay, by wire transfer to the Escrow Agent, an amount equal
     to the product of (x) $0.35 and (y) the number of Option Shares being
     purchased. Upon receipt of the Exercise Notice and purchase price funds,
     the Escrow Agent shall deliver the certificate representing the Option
     Shares to EPC's transfer agent (American Stock Transfer & Trust Co., 40
     Wall Street, New York, NY  10005, Attn: Karen Lazar/Mark Smith) (the
     "Transfer Agent"), accompanied by an executed stock power or powers
     deposited by Brant, which shall be dated and completed by the Escrow Agent,
     together with instructions to the Transfer Agent (substantially in the form
     of Annex B hereto) to deliver a new certificate for the Option shares being
     purchased to EPC (or its designee(s), as the case may be) and to deliver a
     new certificate registered in the name of Brant for the balance of the
     Option shares to the Escrow Agent. Such new certificates shall bear the
     same restrictive legends as the certificate submitted to the Transfer
     Agent, except that the certificate issued to EPC or its designee(s) shall
     not bear the legend that they are subject to the Option Agreement. Promptly
     after submitting the stock certificate and power and instruction letter to
     the transfer agent, the Escrow Agent shall remit the purchase price funds
     received from EPC or its designees to Brant. Promptly following the
     Expiration Date and the processing of any Option exercise made prior to the
     close of business on the Expiration Date, the Agent shall deliver the
     certificate for any unpurchased Option Shares to Brant;

..    at any time and from time to time, in accordance with a Joint Written
     Direction. The Depositors, as between themselves, agree to promptly furnish
     the Agent with Joint Written Directions as to release of the Assets as
     necessary to effect the provisions of the Option Agreement. For purposes
     hereof, "Joint Written Direction" shall mean a written direction executed
     by the Depositors and directing the Agent to disburse all or a portion of
     the Assets. Such Joint Written Direction may be executed in counterparts;
     or

..    pursuant to a court order issued by a court of competent jurisdiction from
     which no further appeal may be taken.

Written instructions as to investments of cash in the Account may be given only
by Brant. Any other instruction as to Assets shall require a joint written
instruction from both Depositors (which may be executed in counterparts).

<PAGE>

                                                                   Page 28 of 31

                                                          Annex A to Schedule II
                                                          ----------------------

                                                         _________________, 200_

US Bank
Corporate Trust Services
100 Wall Street, 16th Floor
New York, NY  10005

Attn:  Adam Berman

         Re:    Environmental Power Corporation ("EPC")/Brant;
                Escrow Account No. 77095040
                ------------------------------------------------

Dear Mr. Berman:

         The undersigned [, as a designee of EPC,] hereby exercises the Option
under the Stock Option and Right of First Refusal Agreement dated as of May 2,
2002 between EPC and Benjamin J. Brant to purchase ___ shares of EPC Common
Stock.

         The undersigned is wiring to you the purchase price of $__________
($0.35 per share being purchased).

         Please arrange for the certificate for such shares to be registered and
delivered by the transfer agent as follows:

         Name:          _______________________
         Tax ID No.:    _______________________
         Address:       _______________________
                        _______________________

         Thank you very much for your assistance.

                                             Very truly yours,

                                             [ENVIRONMENTAL POWER CORPORATION]
                                             [Designee name]
         cc:  Benjamin J. Brant
         7553 S. Gartner Road
         Evergreen, CO 80439

[If applicable, in separate letter or at bottom of page: EPC hereby confirms
that __________ is EPC's designee with respect to the exercise provided above

         ENVIRONMENTAL POWER CORPORATION

         By: ______________________________
             Name:
             Title: ]

<PAGE>

                                                                   Page 29 of 31

                                                          Annex B to Schedule II
                                                          ----------------------

                                                         _________________, 200_

American Stock Transfer & Trust Co.
40 Wall Street
New York, NY  10005

Attn:    Karen Lazar/Mark Smith

         Re:    Environmental Power Corporation (the "Company")
                -----------------------------------------------

Dear Ms. Lazar and Mr. Smith:

         Enclosed please find Certificate No. _____ (the "Existing Certificate")
representing _____ shares of Common Stock of the Company registered in the name
of Benjamin J. Brant, together with [a stock power] [stock powers] executed by
Mr. Brant to transfer ____ of such shares to [the Company] [name of designee]
[and an additional ___ of such shares to [name of designee]].

         Please cancel the Existing Certificate and in place thereof issue:

         .    a new certificate for [the _______ shares] [____ of the shares]
              being transferred to [Environmental Power Corporation, One Cate
              Street, 4th Floor, Portsmouth, NH 03801] [name and address of
              designee], which new certificate should bear the same legends as
              the Existing Certificate except that the legend relating to the
              Stock Option and Right of First Refusal Agreement should be
              omitted; and

         .    [add comparable instructions for any additional transferee; and]

         .    a certificate for the _____ remaining shares (post-transfer)
              registered in the name of Benjamin J. Brant, which certificate in
              Mr. Brant's name for the remaining shares should bear the same
              legends as the Existing Certificate and should be delivered to US
              Bank, Corporate Trust Services, 100 Wall Street, 16th Floor, New
              York, NY 10005, Attn: Adam Berman.

         Please contact Adam Berman at (212) 361-2548 with any questions
concerning the above instructions.

         Thank you very much for your assistance.

                                            Very truly yours,

                                            U.S. BANK TRUST NATIONAL
                                            ASSOCIATION

                                            By: ______________________________

<PAGE>

                                                                   Page 30 of 31

                                  SCHEDULE III
                                  ------------

                       AUTOMATIC MONEY MARKET INVESTMENTS
                       ----------------------------------
                         INVESTMENT AUTHORIZATION LETTER
                         -------------------------------

In the absence of specific written direction to the contrary, U.S. Bank Trust
National Association (or U.S. Bank) is hereby directed to invest and reinvest
proceeds and other available moneys in the following funds as permitted by the
operative documents. Please mark one space with an X for the investment vehicle
selection, and sign below.

     a.   _____________  First American Prime Obligations Fund (Class A)

     b.           X      First American Treasury Obligations Fund (Class A)
          -------------

     c.   _____________  First American Government Obligations Fund (Class A)

     d.   _____________  First American Tax Free Obligations Fund (Class A)

SEE FIRST AMERICAN FUNDS, INC. PROSPECTUS WHICH HAS BEEN PROVIDED.  NOTE THAT
THE ABOVE FUNDS' INVESTMENT ADVISOR AND CUSTODIAN ARE SUBSIDIARIES OF U.S.
BANCORP. SHARES OF THE ABOVE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK INCLUDING U.S. BANK NATIONAL ASSOCIATION, U.S. BANK
TRUST NATIONAL ASSOCIATION, OR ANY OF THEIR AFFILIATES, NOR ARE THEY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISK, INCLUDING
POSSIBLE LOSS OF PRINCIPAL. Neither U.S. Bank Trust National Association nor
U.S. Bank will vote proxies for the First American Funds. Proxies will be
mailed to you for voting.

Fee Basis: Approval of investment of any of these First American mutual funds
includes approval of the fund's fees and expenses as detailed in the enclosed
prospectus, including advisory and custodial fees and shareholder service
expenses (which may be so-called 12b-1 shareholder service fees), which fees and
expenses are paid to U.S. Bank Trust National Association or U.S. Bank,
subsidiaries of U.S. Bancorp.

 Benjamin J. Brant
----------------------------------      ----------------------------------------
 Name                                    Signature of Authorized Directing Party

----------------------------------      ----------------------------------------
 Trust Account Number                    Title

                                        ----------------------------------------
                                         Date

<PAGE>

                                                                   Page 31 of 31

                                  SCHEDULE IV
                                  -----------

                                  Agent's Fees
                                  ------------

Initial Acceptance Fee:                                                $1,000.00
-----------------------
Includes review of the Escrow Agreement and establishing
procedures and controls. (Payable
upon execution of the Escrow Agreement.)

Annual Administration Fee:                                             $2,500.00
--------------------------
Covers normal administrative duties as prescribed to the
terms of the Escrow Agreement.
(Payable in advance.)

Miscellaneous Services:
-----------------------
Fee per Investment of Funds . . .                                         $75.00
(The above fee will be waived for funds deposited in our
money market sweep vehicle that is rated Aaa, AAAm by Moody's
Investor Service and Standard and Poor's Corporation,
respectively.)

Out-of-Pocket:                                                           AT COST
--------------
Expenses including but not limited to
postage, shipping and future counsel fees, if necessary. We do not
expect the utilization of counsel in this transaction.

NOTE:   Charge for performing other services not specifically covered in this
        schedule will be determined by an appraisal of the services rendered.

</TEXT>
</DOCUMENT>
</SUBMISSION>
