Dear Shareholder:

Throughout 2014 EuroSite Power (OTCQB: EUSP) continued to build upon earlier success by consolidating its position as the leading On-Site Utility provider in the UK. Importantly for future growth potential, we raised additional funds while also successfully converting convertible debt to shares of common stock, saving both in future principal and annual interest payments. We also secured further contracts, strengthened our sales pipeline and brought more systems into operation which in turn led to substantial energy production growth, increased revenues and improved margin throughout the period. Taken together, this all bodes well for 2015 as we aim to consolidate our UK position, move towards profitability and position ourselves ready for our longer-term goal of expansion into mainland Europe and thereafter other territories such as Asia.  

Additional capital for the development and installation of both current and new energy systems, business development and general corporate purposes was received in the form of private equity placements of $1.5 million plus a further five year, $3 million loan from John Hatsopoulos, Chairman of EuroSite Power and Co-CEO of American DG Energy. The company can repay the loan at will before the fifth anniversary or when a substantial funding is completed. In another significant move the company also closed an arrangement converting $3.1 million of EuroSite Power convertible debt to shares of common stock saving $3.1 million in future principal payments and $122,000 of annual interest payments. Overall we benefited substantially from these financing efforts. EuroSite Power’s increase in equity and its portion of this new capital during the fourth quarter is $4.5 million.  

Nine new contracts were secured in the first three quarters of 2014. Seven were for hotel chain Menzies, owned by the Topland Group. Two of these systems are already installed and operating while the remaining five are currently under construction. A further two systems were also secured from FJB Hotels to install CHP systems at their Sandbanks Hotel and The Haven Hotel properties in the coastal town of Poole, Dorset. Together, these nine additional systems added 1,060 kW to our total book of contracted systems which now stands at 32 systems and 3,288 kW, with anticipated revenues using various market assumptions and estimates made by the Company of £57.28 (USD $94.60) million. 

Looking forward, the prospect for new sales through 2015 is strong as we have continued to grow our sales pipeline across all key sectors in 2014. In particular, the current pipeline includes multi-site opportunities with a number of major hotel and leisure club chains. Elsewhere, following the success of the Clifton Hospital project, we are actively targeting the NHS where we have already identified over 300 properties that could make substantial savings by deploying an On-Site Utility solution. Partners remain an important part of our sales strategy with new opportunities being introduced to us by existing partners such as Dong Energy and the Shenton Group but also by new partners including RUMM, The Sport Consultancy and RDL. 

Twenty-one systems totalling 2,068 kW are now operating in the UK with a further 11 in backlog. Four systems became operational in the first three quarters of the year while another two systems were also started early in Q4. Highlights include start-up of our first system for the National Health Service at Clifton Hospital and commissioning of our largest UK system to date at Crow Wood Leisure Centre. We have also worked hard to further streamline our design and installation process by working with contractors to establish standard methods of installation and an increasing move to the use of containerised solutions. These allow off-site construction of major systems and components thus speeding up installation and commissioning. 

As our operating fleet has grown, so too has total energy production with the first nine months of 2014 seeing total production exceed 13.5 million kWh, a doubling compared to the same period last year. In turn this resulted in a sharp increase in revenue of 152% to US $1.19 million. Gross margin also increased.  

Our expanded fleet is also now beginning to allow us to gain some economies of scale, particularly in the area of maintenance where we have been working with our maintenance partner to reduce costs and simplify the charging mechanism in such a way as to both incentivise them to improve fleet performance while enhancing our gross margin. Work is also underway investigating alternate methods of procuring gas for our fleet as we believe that by buying gas more smartly, we can further improve gross margin. 

Having firmly established EuroSite Power in the UK, our long-term goal, subject to raising sufficient capital, is to expand our business into mainland Europe; seeking first to exploit those countries where regulatory support or incentives favour our technologies and where utility prices make our offer compelling for potential customers while also improving the prospect of higher return on investment. Beyond Europe, other territories such as Asia offer the potential for further expansion.  

Next year is already shaping up to be a landmark year for EuroSite Power, especially as the work done throughout 2014 has put us in a good place ready for 2015. For example, our existing operational fleet will quickly increase by 840 kW early in 2015 as more of the Menzies projects come online together with both FJB Hotels and the final unit at the Wentworth Club. This will help generate increased revenue early in the year which, when combined with reduced costs and other measures aimed at improving operating performance will deliver improved cash flows throughout the year. 

Yours faithfully, 

Paul Hamblyn (Managing Director), Barry Sanders (Chief Executive), John N. Hatsopoulos (Officer Chairman)

About EuroSite Power

EuroSite Power Limited is a subsidiary of American DG Energy Inc. (NYSE MKT: ADGE). Both companies supply low-cost energy to their customers through distributed power generating systems. The Company is committed to providing institutional, commercial and small industrial facilities with clean, reliable power, cooling, heat and hot water at lower costs than charged by conventional energy suppliers – without any capital or start-up costs to the energy user – through its On-Site Utility energy solutions. More information can be found at www.eurositepower.co.uk. 

FORWARD-LOOKING STATEMENTS

 This letter contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involved a number of risks and uncertainties. Important factors could cause actual results to differ materially from those indicated by such forward-looking statements, as disclosed on the Company's website and in Securities and Exchange Commission filings. This letter does not constitute an offer to buy or sell securities by the Company, its subsidiaries or any associated party and is meant purely for informational purposes. The statements in this letter are made as of the date of this letter, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.