Thermal Energy Signs Letter of Intent for First THERMAL-AUD(TM) Energy Services Agreement with N. American Forest Products Company



    Proposed initial five-year solution to provide customer approximately
    $2.5M in positive cash flow; cut greenhouse gas emissions by 50,000 tons
    of C02

    OTTAWA, June 26 /CNW Telbec/ - Thermal Energy International Inc. (TSX-V:
TMG) (www.thermalenergy.com) is pleased to announce it has signed a letter of
intent to enter into its first long-term energy services agreement with one of
the largest North American forest products companies at one of its pulp and
paper mills in Quebec.
    The proposed solution utilizes Thermal Energy's new THERMAL-AUD(TM)
(Alternate Utility Delivery) program, which provides guaranteed energy savings
using a FLU-ACE(R) waste heat recovery system. This would be a new application
for FLU-ACE(R) on a particular pulp and paper process, which has a
wide-spread, repeatable, application for the industry.
    Under the proposal the customer would receive approximately $500,000 in
positive cash flow annually or $2.5 million over the first five-year term,
from its share of the total energy savings. Thermal Energy would receive
regular payments throughout the term of the contract from the balance of the
energy savings. The project would also reduce the customer's greenhouse gas
emissions amounting to 10,000 tons of CO2 a year, by reducing its consumption
of oil.
    With the THERMAL-AUD(TM) program, Thermal Energy owns and operates the
energy saving assets for the duration of the contract which typically runs for
five years or more. TEI guarantees a significant portion of the energy savings
to the customer commencing the first day of operation. The customer has an
opportunity to renew the contract for a subsequent term or purchase the system
for fair market value at that time.
    "Thermal Energy has been hard at work for more than a year to develop the
THERMAL-AUD(TM) energy services program and to position it with prospective
clients," said President and CEO Tim Angus. "It is the ideal solution to help
customers adopt our excellent energy saving technology such as FLU-ACE(R) and
DRY-REX(TM) without the restrictions or difficult access to capital funding
traditionally required to finance these initiatives."
    Thermal-AUD(TM) reduces the risk to the customer, frees up capital
funding for other purposes, requires little or no upfront customer expenditure
and provides immediate, significant cash flow to the customer from the
savings.
    "Pending establishment of final terms and conditions, we expect to start
work by Fall," said Mr. Angus.

    About Thermal Energy

    Thermal Energy International Inc. is an innovative technology company
providing custom energy and emission reduction, and bioenergy solutions.
Headquartered in Ottawa, Canada, TEI is a designer, design build developer,
fabricator, owner, operator and supplier of proprietary and patented energy
conservation, renewable energy and environmental technology solutions. Thermal
Energy is a fully accredited professional engineering firm, and offers
advanced process and applications engineering services. The Company is a proud
member of the Chicago Climate Exchange (CCX). FLU-ACE(R), Dry-Rex(TM),
THERMALONOx(TM) and THERMALOZOMAx(TM), THERMAL AUD(TM) are trademarks of
Thermal Energy International. GEM(R) is a trademark used under exclusive
license from Gardner Energy Management Ltd.
    For more information about Thermal Energy International Inc. (TSX-V:
TMG), visit our website at www.thermalenergy.com.

    THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
    %SEDAR: 00007994E




For further information:

For further information: Stuart McCarthy, Thermal Energy International
Inc., Investor Relations and Communications, (613) 723-6776, x 220,
stuart.mccarthy@thermalenergy.com

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