Exhibit 20.5 

FROM:	R. Wayne Diesel, CEO  (518/785-2334)
DATE:	January 3, 1997


FOR IMMEDIATE RELEASE 

              MTI REACHES DEBT SATISFACTION AGREEMENT WITH FIRST ALBANY

(LATHAM, New York)  Mechanical Technology Incorporated (MTI) announced that it
has reached an agreement with First Albany Companies Inc. (FAC) to satisfy an
approximate $4.1 million obligation ($3.0 million principal and $1.1 million in
accrued interest). Under the terms of the agreement, MTI will issue one million
shares of common stock to FAC in satisfaction for all principal and interest
obligations under the First Commercial Credit Corporation (FCCC) arrangement.

As a result of the transaction, MTI's financial position has been significantly
enhanced. At September 30, 1996, MTI's latest fiscal year end, MTI reported
Stockholders' Equity of $2.2 million ($6.2 million on a pro forma basis had
this transaction taken place at that date) and book value per share of $0.44
( $1.04 on a pro forma basis). On a prospective basis, significant interest
cost associated with this debt will be eliminated.

Also of significance, the qualification included in the report of the MTI's
independent accountants, Coopers & Lybrand,  which has appeared for several
years, will be removed from the fiscal year September 30, 1996 financial
statements. The qualification in prior years referred to the ability of
MTI to continue as a "going concern".

By way of background, MTI's debt was the result of a $3.0 million loan made in
1993 between a now bankrupt MTI subsidiary ( United Telecontrol Electronics,
Inc.) and FCCC. This loan was pledged as collateral by FCCC in connection with
a loan between FCCC and United Community Insurance Company (UCIC), a New York
insurer which in 1995 was ordered to liquidate by the New York State
Superintendent of Insurance. In connection with the liquidation of UCIC,  FAC
purchased 909,091 shares of MTI common stock owned by UCIC and UCIC's security
interest in the FCCC loan to MTI.

R. Wayne Diesel, Chief Executive Officer of MTI, said that this transaction
virtually completes the financial restructuring of MTI which was begun two
years ago, and will now allow MTI to focus on its businesses, to grow them and
to return them to profitability.

MTI provides contract technology development and engineering services and is a
manufacturer of advanced products for the test and measurement markets.  The
Company was founded in 1961 and is headquartered in Latham, New York.  The
Company's stock trades in the Over the Counter Market and is listed under the
symbol MKTY on NASD's OTC Electronic Bulletin Board.

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