Proton Mtr Pwr Regulatory News (PPS)

Proton Power Systems plc

("Proton Power" or "the Group")

Memorandum of Understanding with Smith Electric Vehicles

partnership to build and market electric vehicles with Proton Power fuel cells as range extender

Proton Power Systems plc (AIM:PPS), a leading designer, developer and producer of fuel cells and fuel cell electric hybrid systems, is pleased to announce that it has signed a Memorandum of Understanding ("MoU") with Smith Electric Vehicles ("Smith"), the commercial electric vehicle division of The Tanfield Group Plc. Under the MoU both parties will collaborate to build and market a battery-powered commercial vehicle, equipped with a Proton Power fuel cell system as a range extender. The collaboration will aim to supply systems to local authorities and other fleet operators across Germany initially, and will address projects in the UK and North America.

This partnership will target Smith's highly successful Edison range of electric light-duty vehicles, which are currently used by leading UK brands such as Sainsbury's, Scottish & Southern Energy and Royal Mail. Smith has also rolled out its larger Newton vehicle in North America, through its associate company Smith Electric Vehicles US Corp.

Proton Power and Smith will present the first prototype at the Hannover Fair in April 2010, a premier trade event for the power industry. Thereafter, the partners plan to roll out the vehicle in transport and maintenance applications across German municipalities, with the first vehicles due to be delivered in the last quarter of 2010. The German-based hydrogen and electric vehicle promotion organisation ('NOW') - backed by the German government - has expressed an interest in providing funding support to operators of electric vehicle fleets and local authorities in Germany for the purchase of up to 20 vehicles with specifications similar to the prototype which will be presented at the Hannover Fair.

Electric vehicles integrated with a fuel cell expand the addressable market for zero emission vans and trucks. Pure electric commercial vehicles have a limited range and are restricted to low mileage, urban operations.

Proton Power's PM200 fuel cell will improve the range of vehicle operation (from 160km to up to 300 km) enabling the vehicles to have a wider application within large fleets. It will also provide an on-board electrical supply which will boost the ease of maintenance work, improving a vehicle's suitability for every-day back-to-base applications, while also supporting auxiliary functions such as air conditioning and heating.

Commenting on the MoU, Thomas Melczer, CEO of Proton Power, said: "Our partnership with Smith Electric Vehicles is a major milestone for the Group. Fuel cell range extenders are an attractive option for overcoming the current problems of electric vehicles. There are strong initiatives, such as NOW, in Europe towards the adoption of electric vehicles and there is also considerable interest in the United States and Canada. We aim to use our fuel cell range extender to help electric vehicle manufacturers such as Smith break further into these markets.

"Smith has extensive experience with electric vehicles and a strong reputation in the market. We look forward to working with them to roll out our fuel cells as vehicle range extenders in Germany and beyond."

- ENDS -

For further information:

Media enquiries:

About Proton Power Systems plc

Proton Power Systems plc is a developer and manufacturer of fuel cells and fuel cell hybrid systems for motive and stationary power supply. Its sales-driven strategy focuses on identifying applications with the greatest market needs and supplying large volumes of cost-competitive systems to fulfil those needs. Proton Power is gaining access to a broad range of markets through partnerships with leading OEMs such as Skoda Electric and Smith Electric Vehicles, in addition to contract manufacturers such as Deutsche Mechatronics.

Proton Power's motive applications include forklifts, city buses, municipal utility vehicles, commercial vehicles and ferries. Stationary applications focus on the Uninterruptible Power Supply ("UPS") sector, where there is a large demand for mission-critical, grid-independent secure power supply in places such as telecommunications stations, data centres, hospitals, and power substations.

Through its wholly owned subsidiary, Proton Motor Fuel Cell GmbH ("Proton Motor"), the Group has developed and deployed fuel cell modules that can be integrated with energy storage media to create hybrid fuel cell systems. Proprietary, intelligent energy management software balances the power output across the system to maximise efficiency and improve power delivery. The system therefore boasts lower fuel consumption and more consistent levels of power delivery than conventional diesel/combustion engine or fuel cell-only systems, while producing zero harmful emissions.

Proton Power Systems plc was admitted to trading on AIM on 31 October 2006 and is incorporated in the UK. Proton Motor has more than 15 years of experience in the fuel cell market and is located in Puchheim, near Munich, Germany.

www.protonpowersystems.com