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Clipper Windpower and BP Announce a Strategic Turbine Supply and Joint Development Agreement

Clipper Windpower and BP Alternative Energy today announced that they have entered into a strategic alliance for a long-term turbine supply agreement and the joint development of five of Clipper's wind energy projects in the USA. The five wind projects, with an anticipated total generating capacity of 2,015 MW, are located in New York, Texas, and South Dakota. Under the long-term supply agreement, BP has secured a mix of firm and contingent orders of up to 2,250 MW of additional Clipper turbines in its global wind portfolio.

Joint Development Portfolio
The Clipper/BP Alternative Energy joint development portfolio will be developed over a five year period. Each project will deploy Clipper's advanced Liberty wind turbines. The projects will be jointly owned by the two companies with Clipper serving as the project operator in two projects and BP Alternative Energy serving as the project operator in the other three.

Turbine Supply Agreement
As part of the long-term turbine supply agreement, BP Alternative Energy has committed to the purchase of 100MW of Liberty turbines in 2007 and 200MW in 2008 which it will use on other projects in BP's global wind business. These orders represent the initial firm deliveries under the long-term supply agreement for up to 900 Liberty turbines over the next five years

Equity Interest
In recognition of the long-term strategic relationship between Clipper Windpower and BP Alternative Energy, BP has acquired a five year share option for a 10% equity interest at £3.77 per share in Clipper Windpower (subject to final approval of the Clipper Shareholders).

Clipper Windpower CEO James Dehlsen said: "This strategic alliance provides both Clipper and BP an unparalleled opportunity to capture a major foothold in the US wind energy market. It enables Clipper to secure a pipeline of turbine deliveries in the next five years. The consideration for the proposals will assist in the execution of these deliveries. With active negotiations for other turbine and portfolio sales currently taking place, it is possible that further contracts will be announced before the Clipper EGM and at that stage an update will be given on our business plan."

Steve Westwell, CEO of BP Alternative Energy, explained: "We believe the Clipper turbine is a break-through in reducing the total cost of renewable energy and we are pleased to be the first large customer for this innovative technology. Our strategic relationship with Clipper represents an important step in expanding BP's low-carbon power business."

Financial Terms and Disclosures
BP has agreed to acquire a 50% interest in the project portfolio along with an option to acquire an interest in Clipper Windpower Plc representing 9,596,681 ordinary shares in the capital of the Company and a turbine supply option, for a total of $30 million. In addition, BP has agreed to pay Clipper up to US$30 million upon successful completion of the development projects. BP will also make a US$30 million down payment for the 300MW Liberty turbines for delivery in 2007/2008.

A notice convening an Extraordinary General Meeting has today been sent to Clipper Shareholders. The EGM will be held on 7 August 2006. Completion of the strategic alliance will take place subject to, inter alia, the passing of a special resolution enabling Clipper to grant the equity option to BP. Clipper has obtained irrevocable undertakings to vote in favour of the necessary special resolution from directors and connected parties and certain other shareholders in respect of 48,053,138 Clipper ordinary shares representing approximately 50 per cent. of the issued share capital. It is a further term of the five year Option arrangement that Clipper has undertaken to BP to permit BP the right to participate in future equity issues, subject to the necessary approvals by Clipper Shareholders at the relevant time and subject to an upper limit of 20 per cent. of the Clipper issued share capital (including shares arising on the exercise of the Options).

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