AUSTIN, Texas (August 27, 2004) -- Active Power, Inc. (NASDAQ: ACPW) today
announced the settlement and conclusion of the Magnex Corp. litigation initiated in 2002 against the company and Joseph Pinkerton, its Chairman and CEO. Under the settlement, which was approved by the company’s board of directors and a special litigation committee consisting of independent directors, Active Power will pay $5.0 million. Mr. Pinkerton also settled the claims pending against him. This settlement resolves all claims in this action.

At June 30, 2004, the company's cash, cash equivalents and investments in marketable securities totaled $62.3 million.

Additional information about the concluded litigation is set forth in Active Power’s most recent quarterly report on Form 10-Q for the quarter ended June 30, 2004. Additional information regarding the settlement, and certain agreements between the company and Mr. Pinkerton related to the settlement, are furnished in a current report on Form 8-K to be filed concurrently with the issuance of this press release.

About Active Power: Active Power, Inc.  (www.activepower.com) designs, manufactures and markets battery-free power quality products that provide the consistent, reliable electric power required by today's digital economy.  An ISO 9001-registered company, Active Power is the first to commercialize a flywheel energy storage system, CleanSource® that provides a highly reliable, low-cost and non-toxic replacement for lead-acid batteries used in conventional power quality installations.Cautionary Note Regarding Forward-Looking Statements:This release may contain forward-looking statements that involve risks and uncertainties.  Any forward looking statements and all other statements that may be made in this news release that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Specific risks include delays in new product development, product performance and quality issues and the acceptance of our current and new products by the power quality market. Please refer to Active Power filings with the Securities and Exchange Commission for more information on the risk factors that could cause actual results to differ. Active Power and our Active Power logo and CleanSource are registered trademarks of Active Power, Inc.  All other trademarks are the properties of their respective companies.Active Power Contacts:Michael ChibibInvestors512.744.9453mchibib@activepower.com