Raser Technologies Closes Geothermal Financing

Provides Summary of Closing and Funding Agreement for Project
Financing and Tax Equity Capital for Development of Raser's 10 MW Utah
Geothermal Power Plant
PROVO, Utah--(Business Wire)--
Raser Technologies, Inc. (NYSE Arca:RZ) announced today the
closing of the initial funding under a definitive agreement that
provides project financing and tax equity capital for Raser's 10
megawatt (MW) Thermo geothermal power project near Beaver, Utah. The
funding arrangement, which was entered into pursuant to the commitment
letter Raser received earlier this year, provides non-recourse debt
financing and tax equity capital to construct the Thermo geothermal
power plant. Under this arrangement, the tax equity capital is
provided by a tax equity partner in exchange for most of the tax
benefits provided by the renewable energy project.

Raser's proprietary geothermal plant is designed to produce 10 MW
of electrical power, or enough to power approximately 9,000 homes,
with zero emissions using PureCycle(R) geothermal power systems from
UTC Power, a United Technologies Corp. (NYSE:UTX) company, and is
expected to be placed in service in October of 2008. Raser is the
engineering, procurement and construction contractor and has
guaranteed the completion of the construction of the project. The
useful life of the Thermo power plant is expected to be approximately
35 years. The useful life of the geothermal resource is expected to be
renewable and have a much longer life than the power plant.

Raser recently announced the results of an independent geological
engineering report completed by GeothermEx, Inc. which concluded that
the Thermo resource and wells had sufficient heat and flow to produce
well in excess of the planned 10 MW. The report also concluded that
the larger Thermo area resource could most likely produce more than
230 MW of geothermal power. Raser believes the resource has sufficient
heat and flow that the plant could potentially support expansion
through "cascading" or "bottom cycling" to produce additional net
power.

The Thermo power plant is held by a special purpose entity, which
will be responsible for debt service, all maintenance and operations
expenses, and the payment of various fees and distributions to Raser
and the tax equity partner. The following provides further details of
the financing agreement and a summary of the expected economics for
the Thermo project based on the current 10 MW design, excluding any
cascading or bottom cycling expansion that the resource could
potentially support:

-- Approximately $31 million of permanent non-recourse debt
financing provided to the Thermo project with a fixed annual
interest rate of 7.00%. The agreement provides for Thermo to
receive proceeds from the debt financing of approximately $26
million for construction of the plant after an original issue
discount of approximately $5 million. After the effect of the
original issue discount, the effective interest rate on the
$26 million in debt cash proceeds is 9.50%. Thermo is expected
to receive the debt financing proceeds at funding within five
days. Upon the initial funding, Raser will immediately receive
approximately $14 million from Thermo for reimbursement of
construction costs incurred prior to closing the project
financing. Thermo is responsible for debt service and is
expected to retire the debt through sculpted principal
payments over 18 years. The sculpted principal payments
provide for larger principal payments than normal amortization
in the earlier years when project cash flows are heaviest.

-- Approximately $25 million of tax equity capital provided for
the tax benefits associated with the project, of which the tax
equity partner will fund 15%, or approximately $3.7 million,
at the initial funding, with additional amounts to be funded
as needed for construction, subject to customary ongoing
representations and warranties. Any remaining balance of the
commitment is expected to be received by Thermo at the time
the geothermal plant is placed in service. Raser expects
Thermo to be placed in service in October 2008.

-- Approximately $35 million for power plant construction costs.
Raser has paid approximately $14 million of the construction
and transmission line costs in advance of closing the project
financing, including approximately $2.6 million of nearly $4
million for substantially upgraded transmission lines and
interconnection equipment in order to create additional
capacity for expected follow-on geothermal projects to be
developed in the same area. From the initial funding to be
received by Thermo, Thermo will reimburse Raser for the
construction costs previously paid by Raser.

-- Raser will receive a $5 million development fee from Thermo,
25% of which is expected to be paid to Raser on the first
anniversary of the date the plant is placed in service, with
the balance to be due and payable after 18 months of
operations.

-- Raser also will receive $0.6 million annually from Thermo for
Raser's services as managing member and operator of the
facility.

-- Prior to the tax equity flip date, Raser is eligible to
receive a management bonus if the plant produces greater than
10.35 MW.

-- Annual operating and maintenance costs for Thermo are expected
to be approximately $2.5 million and are expected to be paid
by Thermo from its operating revenues. These costs include a
manufacturer's guarantee and maintenance agreement provided by
UTC Power.

-- Any residual cash flows available after paying all expenses
and debt service will be distributed 99% to the tax equity
partner and 1% to Raser prior to the equity flip date, which
is anticipated to occur in the tenth year of operation, after
which the distribution split will be 5% to the tax equity
partner and 95% to Raser. Post-flip distributable cash flows
are expected to average approximately $6 million per year for
the rest of the useful life of the plant, assuming the project
is not expanded beyond the current 10 MW structure.

-- Raser's equity contribution to Thermo of approximately $15
million is comprised primarily of the completed well field.
Such amount excludes a valuation allowance of up to
approximately $19 million in additional exploration costs
relating to understanding the greater Thermo area resource
estimated to contain in excess of 230 MW, and other unforeseen
drilling costs, and approximately $5 million of legal and
professional services fees associated with structuring the tax
equity and debt financing agreements. The additional
exploration costs and legal fees were paid by Raser. Raser
expects many of these costs to benefit future planned
projects, including potential additional projects that could
be supported by the larger Thermo resource area and other
future projects based on a similar tax equity structure.
Independent testing and analysis indicate that the Thermo
resource is much more significant, providing hotter
temperatures at deeper levels than had originally been
projected. Raser incurred additional well field development
costs in order to better understand the size and quality of
the larger resource area. The hotter temperature flows from
the Thermo wells could potentially be "cascaded" or "bottom
cycled" to provide additional power output as the geothermal
fluids are passed through additional power generating units
before being re-injected.

Under the previously announced and signed power purchase
agreements, Raser will sell the renewable power generated by the
Thermo plant at a price of $78 per megawatt hour, with a 2% annual
price increase, for a blended average price of approximately $95 per
megawatt hour over the 20 year term of the agreements. Raser continues
to see strong demand for green renewable energy. Raser recently
announced having been short-listed with a large California utility
with a bid of $104 per megawatt hour. With the current strong demand,
Raser believes it is in a position to negotiate higher prices for
future power purchase agreements, which would improve the overall
economics for future projects.

Brent M. Cook, Raser's CEO, commented, "We are excited to have
this important milestone completed. This closing allows Raser to
continue moving forward with our rapid deployment plans. Further, we
are proud to say that this first plant is scheduled to be on line,
producing and selling power, in six months from our groundbreaking in
May of this year. That fact alone revolutionizes the building and
operations of geothermal power plants as we have known them in the
past. Before now, the average time to build a geothermal power project
has been more than three years. We have gained valuable experience
while developing our first geothermal power project. We are pleased
with Thermo's anticipated profitable economics and we believe that the
economics on our future projects have the potential to be even
stronger. The Thermo resource in Utah has proved to be much more
significant and we have committed more resources towards the
development of this geographic area than we had originally budgeted.
We believe some of the expenses incurred during the development of
Thermo will reduce the cost of development for expected future
projects in the larger Thermo resource area. We believe this vast
resource has the potential to support many additional development
projects as we move forward with our rapid deployment strategy. The
verification of this resource and its vast potential reserves is
perhaps one of the most significant events in the history of the
Company. The receipt of the Thermo project financing marks another
significant milestone towards executing our innovative development
strategy for producing clean renewable energy that is important to our
nation's energy future."

Raser's management will hold a webcast at 4:30 PM EDT today to
discuss the financing and answer questions that investors and analysts
may have concerning the agreement. Interested parties may participate
in the webcast by following the link to
http://viavid.net/dce.aspx?sid=000055D7.

About Raser Technologies

Raser (NYSE Arca:RZ) is a publicly traded, environmentally focused
technology licensing and development company operating in two business
segments. Raser's Power Systems segment is seeking to develop clean,
renewable geothermal electric power plants and bottom-cycling
operations, incorporating licensed heat transfer technology and
Raser's Symetron(TM) technology developed internally by its
Transportation and Industrial Technology segment. Raser's
Transportation and Industrial Technology segment focuses on
extended-range plug-in-hybrid vehicle solutions and using Raser's
award-winning Symetron(TM) technology to improve the torque density
and efficiency of the electric motors and drive systems used in
electric and hybrid-electric vehicle powertrains and industrial
applications. Further information on Raser may be found at:
www.rasertech.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including, but not
limited to, statements regarding: our beliefs about preliminary
drilling results; our beliefs about the potential for geothermal power
generation on our leased properties; our belief about our ability to
exploit the available geothermal resources; our beliefs about the
expected timing relating to the developments of our geothermal power
projects; our beliefs about our ability to construct the power plants;
our beliefs about the strength and enforceability of our agreements;
our beliefs that the conditions necessary to fund the development of
our geothermal projects can be satisfied; our beliefs about the
economic benefits of contemplated financing structures; our
understanding of accounting treatments for financial reporting of tax
treatment of our geothermal projects; and our beliefs about the
geothermal market generally. These forward-looking statements involve
certain risks and uncertainties that could cause actual results to
differ, including, without limitation, the competitive environment and
our ability to compete in the industry; our ability to adapt our
technology for geothermal applications; our ability to secure
necessary permits; the strength of our intellectual property; our
ability to attract, train and retain key personnel; and such other
risks as identified in our quarterly report on Form 10-Q for the
quarter ended June 30, 2008, as filed with the Securities and Exchange
Commission, and all subsequent filings.

All forward-looking statements in this press release are based on
information available to us as of the date hereof, and we undertake no
obligation to update forward-looking statements to reflect events or
circumstances occurring after the date of this press release.

Raser Technologies, Inc.
Richard Putnam, Investor Relations, 801-765-1200
investorrelations@rasertech.com
or
Hayden Communications, Inc.
Cameron Donahue, 651-653-1854
cameron@haydenir.com

Copyright Business Wire 2008