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                                                                     Exhibit 4.6

                         ENVIRONMENTAL POWER CORPORATION

                            2002 DIRECTOR OPTION PLAN

1.   PURPOSE

     The purpose of this 2002 Director Option Plan (the "Plan") of Environmental
Power Corporation (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.

2.   ADMINISTRATION

     The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic and non-discretionary in accordance with Section 5.
However, all questions of interpretation of the Plan or of the any options
issued under it shall be determined by the Board of Directors and such
determination shall be final and binding upon all persons having an interest in
the Plan.

3.   DIRECTORS ELIGIBLE FOR PARTICIPATION

     Each director of the Company (serving as such on or after the close of
business on the Effective Date of this Plan) who is not an employee of the
Company or any subsidiary of the Company shall be eligible to participate in the
Plan.

4.   STOCK SUBJECT TO THE PLAN

     (a)  The maximum numbers of shares which may be issued under the Plan shall
be two million (2,000,000) shares of the Company's Common Stock, $.01 par value
per share ("Common Stock").

     (b)  If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.

     (c)  All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended to date and as may be amended from time to time (the
"Code").

5.   TERMS, CONDITIONS AND FORM OF OPTIONS

     Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:

     (a)  Option Grants and Dates. Upon effectiveness of the Plan, options to
purchase 50,000 shares shall be granted automatically to any eligible director
(as defined in Section 3) on the close of business on the date of his or her
initial election or appointment to the Board of Directors if such initial
election or appointment occurs on or after the date of the 2002 Annual Meeting.
Furthermore, options to purchase 50,000 shares shall be granted automatically to
each eligible director (regardless of whether such eligible director was first
elected or appointed

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before, on or after the date of the 2002 Annual Meeting), upon each anniversary
date of his or her initial election or appointment, which anniversary date
occurs on or after the date of the 2002 Annual Meeting; provided that such
eligible director's service is scheduled to continue beyond such anniversary
date.

     (b)  Reduction of Shares Subject to Option; Exercisability. Notwithstanding
Section 5(a) above, any options which have been granted to an eligible director
under the Company's 1993 Director Option Plan within twelve months prior to any
grant under this Plan shall be deducted from the option grant due such director
under the Plan. All options granted under the Plan will be immediately
exerciseable.

     (c)  Option Exercise Price. The option exercise price per share for each
option granted under the Plan shall equal (i) if the Shares are then listed on a
national securities exchange or reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") OTC Bulletin Board, or
other system reporting a close price, the closing price of a Share on the date
of grant (or, if no such price is reported on such date, such price as reported
on the nearest preceding day) (ii) if the shares are then not so listed or
reported but traded in the over-the-counter market, the average closing bid and
asked prices per share on such date; or (iii) the fair market value of the stock
on the date of grant, as determined by the Board of Directors, if the shares are
not publicly traded.

     (d)  Option Non-Transferable. Each option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will, or by
the laws of descent and distribution, or pursuant to a qualified domestic
relations order (as defined in section 414(p) of the Code), and shall be
exercised during the lifetime of the optionee only by him. No option or interest
therein may be transferred, assigned, pledged or hypothecated by the optionee
during his lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.

     (e)  Exercise Period. Except as otherwise provided in the Plan, each option
may be exercised fully on the date of grant of such option, provided, that
subject to the provisions of Section 5(f), no option may be exercised more than
90 days after the optionee ceases to serve as a director of the Company. No
option shall be exercisable after the expiration of ten (10) years from the date
of grant or prior to approval of the Plan by the stockholders of the Company.

     (f)  Exercise Period Upon Disability or Death. Notwithstanding the
provisions of Sections 5(e), any option granted under the Plan:

          (i)   may be exercised in full by an optionee who becomes disabled
     (within the meaning of Section 22(e)(3) of the Code or any successor
     provision thereto) while serving as a Director of the Company; or

          (ii)  may be exercised

                (x)  in full upon the death of an optionee while serving as a
     director of the Company, or

                (y)  to the extent then exercisable upon the death of
     an optionee within 90 days of ceasing to serve as a director of the
     Company,

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     by the person to whom it is transferred by will, by the laws of descent and
     distribution, or by written notice filed pursuant to Section 5(i);

     in each such case within the period of one year after the date the optionee
     ceases to be such a director; provided, that no option shall be exercisable
     after the expiration of ten (10) years from the date of grant.

     (g)  Exercise Procedure. Options may be exercised only by written notice to
the Company at its principal office accompanied by payment of the full
consideration for the shares as to which they are exercised.

     (h)  Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price in cash, by check (bank check, certified
check or personal check), by money order, or with the approval of the Company in
its sole and absolute discretion (and upon such terms and conditions as the
Company may require) (i) by delivering to the Company for cancellation Common
Stock of the Company with a fair market value as of the date of exercise equal
to the option price or the portion thereof being paid by tendering such shares,
(ii) by delivering to the Company the full option price in a combination of cash
and Holder's full recourse liability promissory note with a principal amount not
to exceed eighty percent (80%) of the option price and a term not to exceed five
(5) years, which promissory note shall provide for interest on the unpaid
balance thereof which at all times is not less than the minimum rate required to
avoid the imputation of income, original issue discount or a below-market rate
loan pursuant to Sections 483, 1274 or 7872 of the Code or any successor
provisions thereto or (iii) by delivering to the Company a combination of cash,
the holder's promissory note and Common Stock of the Company with an aggregate
fair market value and a principal amount equal to the option price. The fair
market value of any shares or other non-cash consideration which may be
delivered upon exercise of an option shall be determined by the Board of
Directors.

     (i)  Exercise by Representative Following Death of Director. A director, by
written notice to the Company, may designate one or more persons (and from time
to time change such designation) including his legal representative, who, by
reason of his death, shall acquire the right to exercise all or a portion of the
option. If the person or persons so designated wish to exercise any portion of
the option they must do so within the term of the option as provided herein. Any
exercise by a representative shall be subject to the provisions of the Plan.

6.   ASSIGNMENTS

     The rights and benefits under the Plan may not be assigned except for the
designation of a beneficiary as provided in Section 5.

7.   TAKE TIME FOR GRANTING OPTIONS

     All options for shares subject to the Plan shall be granted, if at all, not
later than December 31, 2007.

8.   LIMITATION OF RIGHTS

     (a)  No Right to Continue as a Director. Neither the Plan, nor the granting
of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any

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agreement or understanding, express or implied, that the Company will retain a
director for any period of time.

     (b)  No Stockholders' Rights for Options. An optionee shall have no rights
as a stockholder with respect to the shares covered by his options under the
date of the issuance to him of a stock certificate therefore, and no adjustment
will be made for dividends or other rights for which the record date is prior to
the date such certificate is issued.

9.   CHANGES IN CAPITAL STOCK

     (a)  If (x) the outstanding shares are increased, decreased or exchanged
for a different number or kind of shares or other securities of the Company, or
(y) additional shares or new or different shares or other securities of the
Company or other non-cash assets are distributed with respect to such shares or
other securities, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company reorganization,
recapitalization, reclassification, stock dividend, stock split, reserve stock
split or other similar transaction with respect to such shares or other
securities, an appropriate and proportionate adjustment shall be made in (i) the
maximum number and kind of shares reserved for issuance under the Plan, and (ii)
the number and kind of shares or other securities subject to then outstanding
options under the Plan and (iii) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. No fractional shares will be
issued under the Plan on account of any such adjustments. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 9 if such
adjustment would cause the Plan to fail to comply with Rule 16b-3 or any
successor rule promulgated pursuant to Section 16 of the Securities Exchange Act
of 1934.

     (b)  In the event that the Company is merged or consolidated into or with
another corporation (in which consolidation or merger the stockholders of the
Company receive distributions of cash or securities of another issuer as a
result thereof), or in the event that all or substantially all of the assets of
the Company are acquired by any other person or entity, or in the event of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the Board of Directors of any corporation assuming the obligations
of the Company, shall, as to outstanding options, take one or more of the
following actions: (i) provide that such options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation (or an
unexercised options will terminate immediately prior to the consummation of such
transaction unless exercised by the optionee within a specified period following
the date of such notice, or (iii) if, under the terms of a merger transactions,
holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to the
difference between (A) the Merger Price times the number of shares of Common
Stock subject to such outstanding options (to the extent then exercisable at
prices not in excess of the Merger Price) and (B) the aggregate exercise price
of all such outstanding options in exchange for the termination of such options.

10.  AMENDMENT OF THE PLAN

     The Board of Directors may suspend or discontinue the Plan or review or
amend it in any respect whatsoever; provided, however, that without approval of
the stockholders of the Company no revision or amendment shall change the number
of shares subject to the Plan or the number of shares issuable to any director
of the Company under the Plan (except as provided in

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Section 9), change the designation of the class of directors eligible to receive
options, or materially increase the benefits accruing to participants under the
Plan. The Plan may not be amended more than once in any six-month period.

11.  WITHHOLDING

     The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee, any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan.

12.  EFFECTIVE DATE AND DURATION OF THE PLAN

     (a)  Effective Date. The Plan shall become effective when approved by the
Board of Directors and the Company's shareholders. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by the Board
of Directors; amendments requiring shareholder approval shall become effective
when adopted by the Board of Directors, but no option granted after the date of
such amendment shall become exercisable (to the extent that such amendment to
the Plan was required to enable the Company to grant such option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any options granted on
or after the date of such amendment shall terminate to the extent that such
amendment to the Plan was required to enable the Company to grant such option to
a particular optionee.

     (b)  Termination. Unless sooner terminated in accordance with Section 9,
the Plan shall terminate upon the earlier of (i) the close of business on
December 31, 2007, or (ii) the date on which all shares available for issuance
under the plan shall have been issued pursuant to the exercise or cancellation
or options granted the Plan. If the date of termination is determined under (i)
above, the options outstanding on such date shall thereafter continue to have
full force and effect in accordance with the provisions of the instruments
evidencing such options.

13.  NOTICE

     Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.

14.  GOVERNMENTAL REGULATION

     The Company's obligation to sell and deliver shares of the Common Stock
under the Plan is subject to the approval of or requirements of any governmental
authority applicable in connection with the authorization, issuance or sale of
such shares.

15.  COMPLIANCE WITH RULE 16B-3

     Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b or its successor promulgated pursuant to Section 16 of
the Securities Exchange Act of 1934. To the extent any provision of the plan or
action by the Board of Directors in administering the

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Plan fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board of Directors.

16.  GOVERNING LAW

     The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware.

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