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<DESCRIPTION>FORM 8-K
<TEXT>
<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 8-K

                                 CURRENT REPORT

                Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934


        Date of Report (Date of earliest event reported): August 15, 2002
                                                          ---------------


                         Environmental Power Corporation
                         -------------------------------
             (Exact name of registrant as specified in its charter)


Delaware                            0-15472                  04-2782065
--------                            -------                  ----------
(State or other jurisdiction      (Commission                (IRS Employer
of incorporation)                 File Number)               Identification No.)


           One Cate Street, 4th Floor, Portsmouth, New Hampshire 03801
                    (Address of principal executive offices)


                                 (603) 431-1780
              (Registrant's telephone number, including area code)

<PAGE>

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits

(c)  Exhibits

99.01 Letter to Shareholders of Environmental Power Corporation ("POWR"), dated
      August 15, 2002, to be included in First Quarter 2002 brochure to
      shareholders.

99.02 Earnings press release for Second Quarter ending June 30, 2002.

Item 9.  Regulation FD Disclosure

The letter attached as Exhibit 99.01 hereto is furnished pursuant to Regulation
FD. It is not filed. The earnings release attached as Exhibit 99.02 hereto is
furnished pursuant to Regulation FD. It is not filed

Cautionary Statement

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements. Certain statements made in the
exhibit to this report, such as statements concerning estimated market potential
and target markets, expectations as to Microgy's profitable production of
renewable energy, beliefs as to investment in the future which will greatly
increase shareholder value in the long-term, potential in the generation of
electricity from agricultural wastes, additional farms entering into
arrangements with us, efforts to build and finance projects, rapid expansion to
meet demands of our markets, potential for growth in markets, belief as to our
anaerobic digestion electricity product being competitive with other sources,
expectations of agricultural waste solutions being profitable to farmers and
that we can grow dramatically and profitably, beliefs as to Microgy's business
complimenting our existing business, beliefs as to our licensed technology
providing a unique solution to two critical market needs, the technology turning
an expensive agricultural industry problem into a profit-generating solution for
farmers and other statements contained herein which are not historical facts are
forward looking statements as such term is defined in the Act. Without limiting
the foregoing, the words "believes", "anticipates", "plans", "expects", "will"
and similar expressions are intended to identify forward-looking statements.
Because such statements involve risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially
include, but are not limited to, uncertainties involving development stage
companies, financing requirements and uncertainties, difficulties involved in
executing on a business plan, technological uncertainties, risks relating to
managing and integrating acquired businesses, volatile and unpredictable
developments (including plant outages and repair requirements), the difficulty
of estimating construction, development, repair and maintenance costs and
timeframes, the uncertainties involved in estimating insurance and implied
warranty recoveries, if any, the inability to predict the course or outcome of
any negotiations with parties involved with POWR's or Microgy Cogeneration
Systems, Inc.'s projects, uncertainties relating to general economic and
industry conditions, the amount and rate of growth in expenses, uncertainties
relating to government and regulatory policies, the legal environment,
intellectual property issues, the competitive environment in which POWR and
Microgy operate and other factors, including those described in POWR's filings
with the Securities and Exchange Commission, including the

<PAGE>

section "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Certain Factors That May Impact Future Results" of POWR's
Annual Report on Form 10-K for the period ended December 31, 2001. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates. POWR undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


ENVIRONMENTAL POWER CORPORATION



August 15, 2002                                /s/ R. Jeffrey Macartney
                                               ---------------------------------
                                               R. Jeffrey Macartney
                                               Treasurer and
                                               Chief Financial Officer
                                               (principal accounting officer
                                               and authorized officer)



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.01
<SEQUENCE>3
<FILENAME>dex9901.txt
<DESCRIPTION>LETTER TO SHAREHOLDERS
<TEXT>
<PAGE>

                                                                   EXHIBIT 99.01

August 15, 2002



Dear Shareholders,

Environmental Power Corporation ("POWR") reported that for the six months ended
June 30, 2002 ("2002'), power generation revenues were $26,090,461 and net
income was $24,141 or 0 cents per share. For the corresponding six months ended
June 30, 2001 ("2001"), power generation revenues were $25,579,769 and net
income was $770,466, or 7 cents per share. The average outstanding shares used
to determine basic earnings per share were 20,144,423 shares in 2002 versus
11,406,783 shares in 2001.

Shareholders should bear in mind that the 2nd Quarter traditionally is the
period in which we shut down for annual maintenance and incur losses for the
period. POWR reported that for the three months ended June 30, 2002 ("2002'),
power generation revenues were $11,977,205 and we incurred a net loss of
($1,742,509) or 9 cents per share. For the corresponding three months ended June
30, 2001 ("2001"), power generation revenues were $12,096,878 with a net loss of
($217,471) or 2 cents per share. The average outstanding shares used to
determine basic earnings per share were 20,038,591 shares in 2002 versus
11,406,783 shares in 2001.

When reviewing the "numbers", it is critical to separate the results our two
business segments - Scrubgrass Generating Facility ("Scrubgrass") and Microgy
Cogeneration Systems, Inc. ("Microgy") - in order to gain a clearer picture of
our true financial performance. Scrubgrass, the 83MW waste coal fired generating
facility in which we own a 22-year leasehold interest, is a profitable,
established business. Microgy, our new anaerobic digestion enterprise that we
expect will profitably produce renewable energy from extracted methane gas found
in animal wastes, is a development stage business with an estimated target
market of approximately $14 billion, with an initial target market of $7
billion. Basically, nearly all of our profits and cash flow from Scrubgrass are
being used to build Microgy. Although, in the short run our profits are
depressed when compared to the prior year, we believe that this is reflecting an
investment in the future which will greatly increase shareholder value in the
long term.

<PAGE>

When looking at our business segments before consolidation, Scrubgrass generated
revenues of $26,090,461 for the six months ended June 30, 2002 as compared to
$25,579,769 for the comparable period in 2001. Scrubgrass had strong net income
before consolidation of $1,137,708 for the six-month period ended June 30, 2002
as compared to $110,392 for the comparable period in 2001. Additionally,
Scrubgrass provided gross cash flows to us of $3,776,536 for the six-month
period ending June 30, 2002 as compared to $610,232 for the comparable period in
2001. Both low interest rates and the solid operating performance of the plant
drove these strong results. Scrubgrass's performance for the most recent quarter
was similarly impressive.

As previously mentioned, Microgy is a development stage business and EPC's
general and administrative expenses for the combination of our corporate
overhead and Microgy expansion costs were $1,718,505 as compared to $707,877 for
the comparable six month periods in 2002 and 2001. The 2001 period did not
include Microgy costs.

As reiterated many times to shareholders, we see great potential in the
generation of electricity from agricultural wastes and, in accordance with our
business plan, are making large investments of both our human capital and our
financial resources to bring that potential to economic reality. Despite very
difficult energy and capital markets and a hostile business environment, much
has been realized. First, we have succeeded in executing a very important
long-term power contract in Wisconsin, one of our strategic markets, and are in
active negotiations for others. Further, we have signed 6 Wisconsin farms to
conditional letters of intent and have begun engineering. We are confident that
other farms will follow. We have also tightened up our construction estimates
and have made considerable progress toward arrangements with important
construction contractors, who will build the facilities at these farms and
others. Finally, we are working very actively to finance this multi-farm
Wisconsin project and are encouraged, despite a very difficult project finance
environment.

Concurrently, we have strengthened our corporate staff and leadership. Most
importantly, the shareholders in July elected three very capable new directors
along with highly valued incumbent directors to our Board. We have only 2 of 8
directors who are members of management and, of

<PAGE>

the 6 outside directors, one is former CEO of a major utility, another is
recently a California utility commissioner, two are former presidents of major
lending institutions, another is the former Undersecretary of the United States
Department of Agriculture and the final outside director is currently the
Chairman of the largest dairy coop in America. These are not only prestigious
individuals but experienced experts with skills and resources in areas critical
to POWR's success.

We have also built key staff with the addition of Ed Chapman, Senior Vice
President, formerly head of tax exempt project finance at Goldman Sachs; Jeff
Macartney, CFO, who formerly served at Pitney Bowes and Wally Long, Vice
President, formerly of R.W. Beck. These men greatly strengthen our capability in
key disciplines and, along with others to come, will constitute the core from
which our business can expand rapidly to meet the demands of our markets.

We believe that our successes to date and to follow are and will continue to be
largely attributable to our business focus: "Doing Well by Doing Good." In this
environment, it helps us overcome the general distrust in the business community
and may even encourage better transaction terms because we do "good" in the
regions where our business partners live and work.

At POWR, we believe deeply in the free enterprise system and the ability and
efficiency of profit driven, private sector businesses to serve the demand for a
better environment. POWR is at the confluence of the markets for two major
environmental solutions: waste management at concentrated animal farms and clean
air from renewable energy. Both of these markets have exceptional potential for
growth and both, to date, mostly have been the province of marginal,
experimental, government subsidized solutions. We believe that our anaerobic
digestion electricity product will be competitive with all other sources of
electric generation, not just subsidized renewables. We believe that our
agricultural waste solutions will be profitable to farmers rather than
alternative solutions which are costly, even if government assisted. We believe
that the free enterprise system will work here and that we can grow dramatically
and profitably from it.

<PAGE>

"Doing Well by Doing Good" is our mantra and we believe it will be the focus of
many businesses of the 21st Century. As a result of huge pressure on businesses
and their leaders to act responsibly, as well as rampant demand for solutions to
social problems that go beyond providing goods and services to individuals and
institutions, we believe we should and will see free enterprise turn toward
these "opportunities". The profit motive is a powerful one and new dynamic
markets are profits' seminal source. Add the desire and need for business to
re-establish its reputation and rightful role of leadership in our society and
you have the recipe for a new, 21st century business paradigm. Little EPC
believes it has found its place in this movement and can and will lead in its
market sectors, which the Company believes to have the potential to be
approximately $14 billion, with an initial target market of $7 billion.

Please keep an eye on our website and watch for our new releases. We remain
committed to providing our investors with timely, appropriate information about
our Company and its progress. Also, feel free to contact us ad we will make
every effort to respond to your questions and inquiries `subject to securities
law restrictions."

Sincerely,

/s/ Donald A. Livingston                      /s/ Joseph E. Cresci

Donald A. Livingston, President               Joseph E. Cresci, Chairman and CEO



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.02
<SEQUENCE>4
<FILENAME>dex9902.txt
<DESCRIPTION>PRESS RELEASE DATED JUNE 30, 2002
<TEXT>
<PAGE>

                                                                   EXHIBIT 99.02

August 15, 2002


NEWS RELEASE                                     Environmental Power Corporation
                                                 www.environmentalpower.com
                                                 One Cate Street
                                                 Portsmouth, NH 03801

--------------------------------------------------------------------------------

Investor Contact:                                Media Contact:

R. Jeffrey Macartney                                   Maria Rosati

Chief Financial Officer and Treasurer                  The Torrenzano Group
603-431-1780                                     212-681-1700, ext. 109
jmacartney@environmentalpower.com                mrosati@torrenzano.com


FOR IMMEDIATE RELEASE

ENVIRONMENTAL POWER CORPORATION REVENUES FROM ALTERNATIVE ENERGY TO FUEL NEW
SOURCE OF PLANNED GROWTH


Portsmouth, NH, August XX, 2002 - Environmental Power Corporation (OTCBB: POWR),
a technology leader in providing solutions for the management of agricultural
waste and production of renewable and conventional power from a variety of
alternative fuel sources, continued to generate a steady stream of revenue from
its 22-year lease on the Scrubgrass waste-coal facility while moving
aggressively to deploy recently acquired anaerobic digestion technology. Power
generation revenues for the three months ended June 30, 2002 of $11,977,206
approximated the $12,096,878 for the same period in 2001, while revenues billed
for power produced during this quarter increased to $10,341,203 compared with
$10,231,588 for the three months ended June 30, 2001. Power generation revenues
for the six months ended June 30, 2002 amounted to $26,090,461, as compared to
$25,579,769 for the same period in 2001. The increase in power generation
revenues during the six months ended June 30, 2002 is primarily attributable to
a 5% increase in certain rates billed to Penelec under the terms of the power
purchase agreement.

Joseph E. Cresci, Chairman and CEO, said, "Billed revenues from power generated
at our Scrubgrass waste-coal facility increased as we were able to repeat last
year's record output levels. These revenues have provided us with cash flow to
invest in the development of our anaerobic digestion technology."

<PAGE>

Net Income (Loss)

Due to the regular annual maintenance outage at Scrubgrass, the company
generally experiences net losses during the second quarter of each year. Our net
loss for the three months ended June 30, 2002 amounted to $1,742,507, or 9 cents
per fully diluted share; as compared to a net loss of $217,471, or 2 cents; for
the three months ended June 30, 2001. The decline in net income for the current
three and six months as compared to the same period in 2001 is mainly the result
of increased spending from efforts to deploy our anaerobic digestion technology.
For the six-month period ended June 30, 2002, net income was $24,141 or 0 cents
per fully diluted share compared with $770,466 or 7 cents for the six months
ended June 30, 2001.

Acquired Technology

In July 2001, Environmental Power Corporation acquired Microgy Cogeneration
Systems, Inc., a development stage company offering management of agricultural
waste and renewable energy, a market with an estimated target market of over $14
billion, including an initial target market of $7 billion. We believe Microgy's
business compliments the company's existing environmentally sound alternative
fuel power business. With the acquisition of Microgy, the company obtained the
exclusive North American license for a highly efficient anaerobic digestion
technology that produces renewable energy generated by methane derived from
animal wastes.

Chairman Cresci stated, "We have owned this North American license for little
more than a year and have not only analyzed the market and developed our
strategies, but we've already begun to implement them by executing a contract
with the Wisconsin Public Service Corporation and conditional letters of intent
with six farms in upper Wisconsin. We believe this technology provides a unique
solution to two critical market needs: the need for pollution control by large
animal feeding operations; and the rapidly growing renewable energy market. In
addition, we expect that the technology will turn an expensive agricultural
industry problem into a profit-generating solution for farmers."

Second Quarter Highlights

     o    Signed conditional letters of intent in July 2002 with six farms in
          Wisconsin to build anaerobic digesters on each site using proprietary
          biogas technology to address the farmers' need for animal waste
          management and desire to produce electricity from renewable sources.

     o    The election of three new board members at the annual meeting held on
          July 25, 2002.

          -    Herman Brubaker is Chairman of the Board of the Dairy Farmers of
               America and a lifetime dairy farmer. He serves on the Board of
               Directors of the National Milk Producers Federation and chairs
               the United Dairy Industry Association.

          -    Jesse Knight recently served on the California Public Utilities
               Commission as Managing Commissioner of the Electric and
               Telecommunication industries of the State. Mr. Knight is former
               Vice Chairman of the World Affairs Council of California and is a
               standing member of the Council on Foreign Relations. Currently,
               Mr. Knight is President and Chief Executive Officer of the San
               Diego Regional Chamber of Commerce.

<PAGE>

          -    Gus Schumacher has served as the third-highest ranking official
               in the United States Department of Agriculture in the Farm and
               Foreign Agricultural Service from 1997-2001 and President of the
               Commodity Credit Corporation. He also directed the Department's
               Foreign Agricultural Service. Mr. Schumacher was the Senior
               Agricultural Project Manager for World Bank and was Commissioner
               of Food and Agriculture for the Commonwealth of Massachusetts.
               Presently, he is a consultant for W.K.K. Kellogg Foundation and
               the Managing Director of SJH and Co.'s Washington D.C.
               operations.

o    Environmental Power Corporation was ranked 15th among New Hampshire's top
     100 public companies by BusinessNH Magazine for 2002 in their June issue.



ABOUT ENVIRONMENTAL POWER CORPORATION

Environmental Power Corporation (OTCBB: POWR) is an entrepreneurial energy
company established in 1982 with annual revenues in excess of $50 million. The
company focuses on environmentally sound power generation and anaerobic
digestion systems, a development stage business in a market with an estimated
target market of over $14 billion, including an initial target market of $7
billion.

CAUTIONARY STATEMENT


The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements. Certain statements contained in
this press release such as statements concerning estimated market potential,
beliefs as to Microgy's business, complimenting Environmental Power
Corporation's existing business, beliefs as to the our licensed technology
providing a unique solution to two critical market needs, the technology turning
an expensive agricultural industry problem into a profit-generating solution for
farmers and other statements contained herein regarding matters that are not
historical facts are forward looking statements as such term is defined in the
Act. Because such statements involve risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially
include, but are not limited to, uncertainties involving development stage
companies, financing requirements and uncertainties, difficulties involved in
developing and executing on a business plan, technological uncertainties, risks
relating to managing and integrating acquired businesses, volatile and
unpredictable developments (including plant outages and repair requirements),
the difficulty of estimating construction, development, repair and maintenance
costs and timeframes, the uncertainties involved in estimating insurance and
implied warranty recoveries, if any, the inability to predict the course or
outcome of any negotiations with parties involved with POWR's or Microgy's
projects, uncertainties relating to general economic and industry conditions,
the amount and rate of growth in expenses, uncertainties relating to government
and regulatory policies, the legal environment, intellectual property issues,
the competitive environment in which POWR and Microgy operate and other factors,
including those described in the Company's filings with the Securities and
Exchange Commission, including the section "Management's Discussion and

<PAGE>

Analysis of Financial Condition and Results of Operations -- Certain Factors
That May Impact Future Results" of POWR's Quarterly Report on Form 10-Q for the
period ended June 30, 2002. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. POWR
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.


                      For more information, please contact:

                        jmacartney@environmentalpower.com
                           www.environmentalpower.com

<PAGE>

ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                      Three Months Ended June 30       Six Months Ended June 30
                                                         2002            2001           2002              2001
                                                     -----------     -----------     -----------      -----------
<S>                                                  <C>             <C>             <C>              <C>
POWER GENERATION REVENUES                            $11,977,205     $12,096,878     $26,090,461      $25,579,769
                                                     -----------     -----------     -----------      -----------
COSTS AND EXPENSES:
     Operating expenses                                7,469,811       7,529,833      12,614,544       12,487,073
     Lease expenses                                    6,291,677       5,859,101      13,075,057       11,874,123
     General and administrative expenses                 976,662         802,751       2,334,541        1,488,480
     Depreciation and amortization                       136,689          86,564         272,660          173,111
                                                     -----------     -----------     -----------      -----------
                                                      14,874,839      14,278,249      28,296,802       26,022,787
                                                     -----------     -----------     -----------      -----------
OPERATING LOSS                                        (2,897,634)     (2,181,371)     (2,206,341)        (443,018)
                                                     -----------     -----------     -----------      -----------

OTHER INCOME (EXPENSE):
     Interest income                                      12,479          22,960          22,032           41,744
     Interest expense                                    (40,062)        (33,124)        (70,561)        (102,427)
     Amortization of deferred gain                        77,102          77,102         154,205          154,205
     Sales of NOx emission credits                             0             ---       2,428,200              ---
     Other income                                            859       1,677,962           2,859        1,677,962
                                                     -----------     -----------     -----------      -----------
                                                          50,378       1,744,900       2,536,735        1,771,484
                                                     -----------     -----------     -----------      -----------
(LOSS) INCOME BEFORE INCOME TAXES                     (2,847,256)       (436,471)        330,394        1,328,466

INCOME TAX BENEFIT (EXPENSE)                           1,104,749         219,000        (306,251)        (558,000)
                                                     -----------     -----------     -----------      -----------
NET (LOSS) INCOME                                    $(1,742,507)    $  (217,471)    $    24,143      $   770,466
                                                     ===========     ===========     ===========      ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
     Basic                                            20,038,591      11,406,783      20,144,423       11,406,783
     Diluted                                          20,159,583      11,406,783      20,216,663       11,406,783

EARNINGS PER COMMON SHARE:
     Basic                                           $     (0.09)    $     (0.02)    $      0.00      $      0.07
     Diluted                                         $     (0.09)    $     (0.02)    $      0.00      $      0.07
</TABLE>


See Notes to Condensed Consolidated Financial Statements.

<PAGE>

ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                             June 30            December 31
                                                                               2002                2001
                                                                           ------------         -----------
<S>                                                                        <C>                  <C>
ASSETS

CURRENT ASSETS:
    Cash  and  cash equivalents                                            $   879,309          $   468,271
    Restricted cash                                                          1,588,257            1,014,580
    Receivable from utility                                                  5,978,823            7,905,864
    Other current assets                                                       912,946              607,590
                                                                           -----------          -----------
            TOTAL CURRENT ASSETS                                             9,359,335            9,996,305

PROPERTY, PLANT AND EQUIPMENT, NET                                           1,380,057              652,830

LEASE RIGHTS, NET                                                            2,087,001            2,161,503

ACCRUED POWER GENERATION REVENUES                                           66,920,989           63,648,995

GOODWILL                                                                     4,912,866            4,912,866

LICENSED TECHNOLOGY RIGHTS, NET                                              3,536,189            3,628,177

OTHER ASSETS                                                                   544,343              565,570
                                                                           -----------          -----------
           TOTAL ASSETS                                                    $88,740,780          $85,566,246
                                                                           ===========          ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable and accrued expenses                                  $ 8,276,399          $ 9,382,471
    Secured promissory note payable to related party                           750,000              750,000
    Other current liabilities                                                2,466,358            1,363,108
                                                                           -----------          -----------
          TOTAL CURRENT LIABILITIES                                         11,492,757           11,495,579

DEFERRED GAIN, NET                                                           4,317,750            4,471,955

SECURED PROMISSORY NOTES PAYABLE
    AND OTHER BORROWINGS                                                     1,383,148            1,420,467

DEFERRED INCOME TAX LIABILITY                                                  228,115              146,396

ACCRUED LEASE EXPENSES                                                      66,920,989           63,648,995
                                                                           -----------          -----------
         TOTAL LIABILITIES                                                  84,342,759           81,183,392
                                                                           -----------          -----------

SHAREHOLDERS' EQUITY:
    Preferred Stock ($.01 par value; 2,000,000 shares authorized as of
         June 30, 2002 and December 31, 2001; no shares issued)                      0                    0
    Preferred Stock (no par value, 10 shares authorized; 10 shares
         issued as of June 30, 2002 and December 31, 2001)                         100                  100
    Common Stock ($.01 par value; 50,000,000 shares authorized;
         21,370,293 issued; and 20,251,653 outstanding as of
         June 30, 2002 and December 31, 2001)                                  213,702              213,702
    Additional paid-in capital                                               6,897,253            6,850,046
    Accumulated deficit                                                     (1,494,247)          (1,518,390)
    Accumulated other comprehensive loss                                       (60,385)             (60,385)
                                                                           -----------          -----------
                                                                             5,556,423            5,485,073

    Treasury stock (1,118,640 common shares, at cost, as of
         June 30, 2002 and December 31, 2001)                                 (512,454)            (456,271)
     Notes receivable from officers and board members                         (645,948)            (645,948)
                                                                           -----------          -----------
          TOTAL SHAREHOLDERS' EQUITY                                         4,398,021            4,382,854
                                                                           -----------          -----------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $88,740,780          $85,566,246
                                                                           ===========          ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE>

ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                     Six Months Ended June 30
                                                                      2002              2001
                                                                  ------------      ------------
<S>                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                    $    24,143       $   770,466
    Adjustments to reconcile net income to net cash
       Provided by operating activities:
          Depreciation and amortization                               272,660           173,111
          Deferred income taxes                                        81,719            98,000
          Amortization of deferred gain                              (154,205)         (154,205)
          Stock Based Compensation                                     49,707
          Accrued power generation revenues                        (3,271,994)       (3,730,422)
          Accrued lease expenses                                    3,271,994         3,730,422
          Changes in operating assets and liabilities:
               Decrease (Increase) in receivable from utility       1,927,041         1,235,085
               Decrease (increase) in other current assets           (318,663)         (718,126)
               Increase in other assets                                 3,407            (5,003)
               (Decrease) increase in accounts payable and
                   accrued expenses                                    (2,822)        1,775,116
               Increase (Decrease) in long-term debt to supplier            0           (96,274)
                                                                  -----------       -----------
                     Net cash provided by operating activities      1,882,987         3,078,170
                                                                  -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Increase in restricted cash                                      (573,677)         (626,388)
    Acquisition related expenditures                                                   (199,702)
    Property, plant and equipment expenditures                       (802,270)           (1,000)
                                                                  -----------       -----------
                   Net cash used in investing activities           (1,375,947)         (827,090)
                                                                  -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Dividend payments                                                  (2,500)         (173,602)
    Net repayments under working capital loan                                        (1,523,641)
    Purchase of Treasury Stock                                        (56,183)
    Advances on notes receivable from officers                                         (200,000)
    Repayment of secured promissory notes payable and
         other borrowings                                             (37,319)          (37,083)
                                                                  -----------       -----------
                  Net cash used in financing activities               (96,002)       (1,934,326)
                                                                  -----------       -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      411,038          (316,754)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                        468,271           307,666
                                                                  -----------       -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                          $   879,309       $   624,420
                                                                  ===========       ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

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