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Hydrogen Engine Center, Inc. and Aditya Birla Group’s Grasim Industries Ltd.

Sign Joint Technology and Marketing Memorandum of Understanding

ALGONA, Iowa (August 28, 2006) – Hydrogen Engine Center, Inc. (HEC) (OTCBB: HYEG.OB) announced that HEC and Grasim Industries Ltd. will work together to bring HEC’s hydrogen engine technology to the chemical industry.

Grasim, an Aditya Birla Group flagship company, based in India , has purchased from HEC a hydrogen fueled Oxx Power™ generator set. HEC and Grasim will collaborate to develop a closed loop system for stationary, near zero emission power generation for chlor-alkali manufacturing plants. The system will operate using HEC’s Oxx Power engines and highly scalable genset technology. The HEC genset is powered by hydrogen, which is a readily available by-product of the Grasim chlor-alkali factory.

This use of the HEC genset could transform the distributed generation (DG) market. Until now, DG products have been small-scale, high emissions niche products used in back up situations. With the launch of this project, and the use of HEC’s gensets by Grasim, HEC expects to help transform the DG market to a large-scale power generation solution – providing multi-megawatt, continuous, clean burning power generation capability. HEC plans to market its hydrogen powered engines and gensets as a reliable and highly scalable distributed power generation solution. Grasim will help in this project by deploying the HEC solution internally and by marketing the HEC solution to chlor-alkali facilities around the world.

Ted Hollinger , HEC’s president and CEO, stated, “The integration of HEC’s advanced power technology with Grasim’s industry expertise is expected to yield a proven, industry-specific power generation solution. We view this industry sector as a strategic market – and the Grasim team will help us demonstrate how to utilize hydrogen by-products as a low cost, reliable fuel source in our Oxx Power gensets.”

“There is a wide array of industry applications for our power technology,” Hollinger said. “Wind farms and solar stations can also utilize hydrogen by-products as a reliable source for low cost, environmentally friendly fuel in our Oxx Power gensets,” he added.

This process spans multiple countries. Teams at HEC’s headquarters and HEC-Canada intend to collaborate with their colleagues at Grasim in India to work towards securing various approvals and manufacturing permits as would enable HEC to supply the custom power solution products for chlor-alkali factories that Grasim will market to customers around the world.

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