Ballard Power Systems (TSE:BLD; NASDAQ:BLDP) announced today that its associate company, EBARA BALLARD, unveiled the second-generation of its engineering prototype 1-kW proton exchange membrane (PEM) fuel cell stationary power generator for the Japanese residential market. This prototype exhibits increased performance and efficiency and its volume has been reduced by 40 per cent. The natural gas-fuelled cogeneration unit is the product of a collaboration involving Ballard´s subsidiary Ballard Generation Systems (BGS), EBARA BALLARD, EBARA Corporation and Tokyo Gas. The second-generation prototype unit has advanced to include an electrical inverter, to convert DC to usable AC power, and operates at an AC gross electrical efficiency of 34 per cent (lower heating value "LHV"). Heat recovery efficiency has increased to 47 per cent (LHV), giving total efficiency of 81 per cent (LHV).

"This fuel cell stationary power generator will provide electric power for Japanese homes as well as heat for space heating and hot water," said Mike Murry, Ballard´s Vice-President, Power Generation. "The increased performance of this next generation prototype is testimony to the effectiveness of our collaboration with EBARA Corporation and Tokyo Gas."

"We are pleased with the rapid progress towards commercialisation that EBARA BALLARD is making," said EBARA BALLARD President, Masakatsu Ohya. "We consider ourselves on track to meet the objective of beginning to sell residential fuel cell power generation units commercially in 2004."

The unit comprises a BALLARD® fuel cell, Tokyo Gas technology in a reformer made by EBARA BALLARD, and a water tank warmed with heat from the fuel cell.

EBARA BALLARD is a jointly held company of EBARA Corporation of Japan and Ballard Generation Systems with a mandate to supply Ballard Generation Systems´ fuel cell power generators incorporating the BALLARD® fuel cell to customers in Japan.

EBARA Corporation is globally recognized as a major developer, manufacturer and distributor of fluid machinery and systems, precision machinery and environmental engineering systems and as a leader in zero-emission energy technology.

Tokyo Gas is the largest natural gas company in Japan both in terms of the number of customers - over 8.9 million in total - and gas sales volume. Founded in 1885, its service area now covers over 3,100 square kilometres in the heart of the Kanto region, Tokyo and neighbouring prefectures, the largest and most densely populated region in Japan with a total of some 40 million people. Tokyo Gas is conducting research and development in many areas including cost reduction, safety enhancement and efficient utilization of natural gas, and fuel-processing technologies.

This release contains forward-looking statements that are based on the beliefs of Ballard´s management and reflect Ballard´s current expectations as contemplated under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. When used in this release, the words "estimate", "project", "believe", "anticipate", "intend", "expect", "plan", "predict", "may", "should", "will", the negative of these words or such other variations thereon or comparable terminology are intended to identify forward-looking statements. Such statements reflect the current views of Ballard with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements.

Ballard Power Systems is recognised as the world leader in developing, manufacturing and marketing zero-emission proton exchange membrane (PEM) fuel cells. Ballard is commercialising fuel cell engines for the transportation market, electric drive trains for both fuel cell and battery powered electric vehicles, power conversion equipment for microturbines and other distributed generation technologies, fuel cell power generation equipment for markets ranging from 1-kilowatt portable power products to larger stationary power generation products and is a Tier 1 automotive supplier of friction materials for power train components. Ballard´s proprietary technology is enabling automobile, electrical equipment and portable power product manufacturers to develop environmentally clean products for sale. Ballard is partnering with strong, world-leading companies, including DaimlerChrysler, Ford, ALSTOM and EBARA, to commercialise BALLARD® fuel cells. Ballard has supplied fuel cells to Honda, Nissan, Volkswagen, Yamaha, Cinergy, Coleman Powermate and Matsushita Electric Works, among others.

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