Contact: Rick Teller
                                                    The Teller Group, LLP
                                                    (781)545-3600
                                                  e-mail: teller@bloomberg.net

                              FOR IMMEDIATE RELEASE
                              ---------------------


                      ENERGY RESEARCH CORPORATION ANNOUNCES
             SPIN-OFF OF ITS BATTERY BUSINESS GROUP TO SHAREHOLDERS

Danbury, Connecticut,  October 1, 1998 -- Energy Research Corporation (AMEX:ERC)
announced  today  that its Board of  Directors  has  approved a plan to effect a
spin-off  to its  stockholders  of  100%  of the  shares  of  Evercel,  Inc.,  a
newly-formed,  wholly-owned  subsidiary of ERC. ERC will transfer to Evercel the
principal  assets and  liabilities  related  to ERC's  battery  business  group,
effective  on or about  October  31,  1998.  Following  the  transfer,  ERC will
distribute to its  stockholders in a tax-free  distribution one share of Evercel
Common  Stock for each share of ERC Common  Stock  held.  ERC will  continue  to
operate its fuel cell  business,  and  Evercel  will own and operate the battery
business group. The transaction is subject to certain conditions.

Jerry D.  Leitman,  ERC's  President and Chief  Executive  Officer,  said,  "The
battery  business  group  and the fuel  cell  business  of ERC  have  distinctly
different investment,  operating and financial characteristics.  The spin-off of
Evercel  will  allow  each  company  to  more  appropriately  undertake  capital
requirements   and  investment   decisions  and  to  pursue  separate   business
strategies.  The spin-off will also allow investors to invest in either business
without consideration of the other."

The spin-off will be reflected in ERC's financial statements as a charge against
stockholders'  equity. The anticipated pro forma  consolidated  effect on ERC of
the  spin-off,  if it had occurred on July 31,  1998,  would have been to reduce
ERC's  assets  by  approximately  $3.6  million  and  stockholders'   equity  by
approximately $0.3 million.

Immediately after the distribution of Evercel's shares to ERC's stockholders, in
order to fund its commercialization  efforts,  Evercel plans to conduct a rights
offering  to  its  stockholders.  As  described  more  fully  in a  Registration
Statement  filed by Evercel  with the  Securities  and  Exchange  Commission  on
September  30,  1998,  Evercel  will  grant at no cost to  holders of its Common
Stock, transferable subscription rights ("Rights") to subscribe for and purchase
an additional share of Evercel's  Common Stock.  Each holder of Evercel's Common
Stock will  receive one Right for each share of Common  Stock held on the record
date (which has not yet been determined).  Each Right will be exercisable, for a
period of  approximately  30 days,  to  purchase  one  share of Common  Stock of
Evercel at a purchase price of $2.00 per share. The Rights Offering will be made
only  by  means  of  a  Prospectus  which  will  be  delivered  to  stockholders
concurrently with the distribution.



Jerry D. Leitman will continue as President and Chief  Executive  Officer of the
Company and as Acting President and Chief Executive Officer of Evercel.  ERC and
Evercel anticipate completing the spin-off and rights offering by the end of the
year.


Energy Research Corporation, located in Danbury and Torrington,  Connecticut, is
an internationally  recognized leader in the field of electrochemical technology
for electric  power  generation  and storage.  ERC is developing its Direct Fuel
Cells and batteries  through  funding from and in cooperation  with  government,
electric utility and major international industrial organizations.

This press release contains  forward-looking  statements concerning the transfer
of ERC's battery  business  group to Evercel,  the completion of the spin-off of
Evercel to ERC's stockholders and the rights offering to Evercel's stockholders.
There are a  variety  of  factors  which  could  cause  actual  events to differ
materially from those  projected in the  forward-looking  statements,  including
without limitation, (i) the risk that the transfer of the battery business group
to Evercel,  the  spin-off or the rights  offering  may not be  completed as the
result of future  developments  in ERC's or Evercel's  business or conditions in
their  industries,  failure  to obtain  necessary  government  approvals,  legal
opinions,  or third party  consents or other  developments,  (ii)  unanticipated
costs and expenses or other events  affecting ERC's or Evercel's  business,  and
(iii) other risks listed in the Company's SEC reports,  including the reports on
Form 10-K for the year  ended  October  31,  1997 and Form 10-Q for the  quarter
ended July 31, 1998.