September 3-10, 2007

Thermal Energy creates green energy subsidiary, signs supply deal with Fraser Papers

Thermal Energy International has established a new green energy subsidiary, ForEverGreen Energy. The new company will own and operate Thermal Energy assets to be used under the Thermal-AUD(TM) (Alternate Utility Delivery) program.

This program enables Thermal Energy's clients to generate immediate energy savings without any up-front or large capital investments. It also gives customers a further opportunity to meet or surpass emission reduction targets and achieve energy reduction targets while preserving capital for other projects.

"The creation of ForEverGreen is a very important step in diversifying Thermal Energy's business from individual sales to long-run, multi-year profits from assets owned by this energy services company," said Thermal Energy president and CEO Tim Angus, who will also be president of the new company.

ForEverGreen Energy has also signed its first Thermal-AUD green energy supply contract to provide recovered waste heat for Fraser Papers' Thurso, Quebec pulp mill. The six-year green power purchase agreement is valued at up to $3.75 million (U.S.), based on the estimated amount of waste heat to be recovered. Fraser Papers has an option to purchase the project assets at the end of the term. ForEverGreen will contract with Thermal Energy for the supply, installation and performance management of the Flu-Ace system at the Thurso mill.

"This initiative will improve our energy efficiency and strengthens our environmental position at our pulp and paper facilities," noted the mill's general manager Jean Pierre Benoit.

Once installed on the mill's main heat stack, the heat exchange unit will produce thermal power that the Thurso operations will use to displace approximately 5% to 10% of the mill's total fossil fuel use. The Thermal-AUD program is expected to reduce fossil fuel consumption by the facility's boilers by approximately 20%. The system will also yield environmental benefits, including: reduction of greenhouse gases such as CO2 by as much as 10,425 tons a year; and reduction in nitrogen oxide (NOX) emissions by as much as 22.9 tons a year and sulfur dioxide (SO2) emissions by as much as 131 tons a year.

The anticipated emission reductions are equivalent to permanently removing more than 2,000 cars from the road, which is more than double the number of cars driven by the residents of the entire town of Thurso.

Work on the project will begin during the downtime scheduled for facility maintenance in October 2007.

"This contract is a validation of an exciting new business model which has received a lot of interest from various industries since we introduced it to the market earlier this year," said ForEverGreen president and CEO Tim Angus. "We knew customers, especially the pulp and paper sector, were looking for ways to beat high energy costs and generate immediate savings without investing large amounts of capital."

Based in Ottawa, Thermal Energy International is a designer, design build developer, fabricator, owner, operator and supplier of proprietary and patented energy conservation, renewable energy and environmental technology systems. Its technologies include Flu-Ace, Dry-Rex, ThermaloNOX and Thermalozomax as well as Thermal-AUD. The company is also a member of the Chicago Climate Exchange (CCX).

More information is available from Jean-Pierre Benoit at Fraser Paper's Thurso mill, 819/985-5021, E-mail jeanbeno@th.fraserpapers.com, Web site www.fraserpapers.com, or from Stuart McCarthy at Thermal Energy, 613/723-6776, ext 220, E-mail stuart.mccarthy@thermalenergy.com, Web site www.thermalenergy.com.

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