May 2008

OTCBB: TMENOTCBB: TMEN

Forward Looking StatementsForward Looking Statements

This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities. It is presented to licensed broker-dealers and registered investment advisors for analysis purposes only. Certain statements contained in this slide presentation are forward looking statements that involve a variety of risks and uncertainties including, but not limited to, our product development efforts, future product demand and market acceptance, the effects of economic conditions, the impact of competitive products and pricing and other risks disclosed in our Securities and Exchange Commission filings.

ThermoEnergy Corporation is a diversified clean technologies company engaged in the worldwide commercialization of patented and/or proprietary municipal and industrial wastewater treatment and power generation technologies.

Water - The wastewater treatment technologies are consolidated

in our subsidiary, CASTion Corporation (CASTion), a developer and manufacturer of innovative wastewater treatment and recovery systems to industrial and municipal clients.

Clean Power Generation - The power generation technologies are consolidated in our subsidiary, ThermoEnergy Power Systems, LLC (TIPS). The economic and environmental matrix of the Company's technologies represents a paradigm shift in these key infrastructure industries.

* Close of Market 5/09/08

Share Price: $1.40(5/13/08)

Fiscal Year End: 12/31

Market Cap: $58.1M Cash Balance: $3.2M(12/31/2007)

52 Week Range: $0.60-$1.95 Enterprise Value: $54.2M

Shares Outstanding: 41.5M Insider Ownership: 44.4%

Company ThermoEnergy Corporation (OTCBB:TMEN)

Headquarters Little Rock, Arkansas

Additional Locations Worcester, MA / Jacksonville, FL, Baton Rouge, LA / New York, NY

Corporate Summary Corporate Summary

Investment HighlightsInvestment Highlights Wastewater Treatment and Zero Air Emission Fossil Fuel Power Generation

Company Utilizing Patented & Disruptive Technologies

Wastewater Treatment Subsidiary – CASTion – Operates In 2 Markets:Municipal and Industrial

65 Large-Scale Industrial Systems Currently In Operation In: United States ▪ Mexico ▪ Japan ▪ Canada

First Municipal System - $12.4M ARP Facility for New York City Plant Start-Up Target Date: February 2009

Advanced Power Plant Design Under Development Converts Fossil Fuels & Biomass Into Energy with Zero Air Emissions + CO2 Capture Development Team Includes: CANMET / MIT / RSE / UNR Currently Finalizing 3rd US Gov Grant Designed To Fast-Track Development MOU w/ Babcock Power To Commercialize Technology Expect To Have Large-Scale Prototype Plant in Operation by 2010

Municipal Division: Carbon Reduction / Nutrient Removal / Renewable Energy Systems for POTW’s Key technology: Ammonia Recovery Process (“ARP”)

Industrial Division: Water Conservation/Reuse / Chemical Recovery / Water Purification Key technology: Zero Liquid Discharge (“ZLD”)

Municipal MarketMunicipal Market 16,000 POTW in US

$8 Billion Overall Market

Ammonia $Billion+ Niche Play

560 POTW’s Currently Affected

Direct Sls Potential: $600M

D/B/O/O Potential: $1B - $2B in 3

Yrs.

Industrial MarketIndustrial Market 185,000+ Facilities US w/ NPDES Permits

$12.5 Billion Overall Mkt

$5.5 Billion Direct Equipment Sale

Water Conservation Rapidly Growing Seg Fragmented Mkt Provides Excellent Opportunity for Focused Market StrategyOpportunity for Focused Market Strategy

CASTion Water Group CASTion Water Group

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Municipal: ARP Process Overview Municipal: ARP Process Overview

Process Inputs:Centrate ~ 1,000 ppm NCaustic, Brine, Flocculent, Power

PretreatmentSolids RemovalSofteningRough Capture

Ammonia Capture:Adsorption CaptureRegenerationpH Adjustment

Process Outputs:Spent Softening BrineSolids ReturnAmmonium Sulfate

Process Inputs:CausticAcidPower

Process Outputs:Treated Centrate N <100 ppm

PretreatedCentrate

Concentrated Regeneration Solution 7,000ppm

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Nitrogen/Ammonia Latest Regulatory Problem for Wastewater Plants Leading Cause of Dead Zones Worldwide (areas devoid of aquatic life) Currently being regulated in NY / PA / DE / VA / DE / MD / District of Columbia

Similar reg’s pending in states of Illinois, Oregon, Washington, California and Florida

Revenue Model based on four options Design / Build / Own / Operate (D/B/O/O) – ‘privatization’ Design / Build / Operate – 26th Ward project Direct Equipment Sales Direct License – specific application or territory (royalty)

Potential Revenue based on tipping fees from D/B/O/O model Based on current revenue projections using $4 lb. ammonia removed tipping fee

Top 20 markets potential: $ 680 M annually Top 50 markets potential: $ 1.9 B annually

Projected global water/wastewater market 10 times US market

Municipal Market Potential for ARP Municipal Market Potential for ARP

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ARP Near Term Market Potential ARP Near Term Market Potential

New York City project – 26th Ward WPCP Brooklyn

First commercial project $12.5m project (includes 1 yr of operation) – total project being financed by City 500,000 gpd centrate / recovering 1.2m lbs. of ammonia annually Expect to convert project into long-term operating contract

Based on $4 per lb of ammonia removed NYC generates total of 4.2 mgd from all eight dewatering plants Revenue potential for treating all 4.2m gpd of NYC centrate = $400 M / 20 yr. Contract 40% EBITDA margin to TMEN

Additional opportunities being negotiated Washington Area Sewage Authority’s Blue Plains POTW (3 mgd centrate) Metropolitan Water Reclamation District of Greater Chicago (5 mgd centrate)

Strategic partnership with larger companies well placed in Company’s target markets

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Industrial Market OverviewIndustrial Market Overview CASTion provides custom designed, turn-key wastewater treatment, chemical

recovery, water conservation & purification systems worldwide for broad range of industrial applications including:

Refining / pulp & paper / chemical processing / heavy manufacturing / micro electronics / food processing / textile manufacturing / aircraft manufacturing / consumer products

Client base includes fortune 500 companies such as:

US industrial wastewater treatment market approaching $12.5 billion / year Key market players are GE / Siemans / US Filter (together representing 40% of the market) Remaining market is highly fragmented

CASTion Advantages Extensive IP portfolio Low cost technology provider Strategic partnerships with key industry players

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Developing advanced new power plant design known as ThermoEnergy Integrated Power System (“TIPS”)

2 US patents & 6 foreign patents issued / 31 foreign patents pending

Evolutionary design that delivers revolutionary performance Based on reliable and well understood oxy-fuel chemistry Combusts fossil fuels & biomass with zero air emissions Proprietary carbon capture technology

Phase 1: Finalizing 2-year crash development program Funded by 3 US government grants totaling $2.3m

Phase 2: Design / build / operate large-scale prototype plant MOU with Babcock Power Inc.

CANMET report shows installed cost slight premium to conventional coal plant

Energy DivisionEnergy Division

Government Regualtions Clean Air Act – mandated emission reduction Kyoto Protocol – Nations must diminish CO2 emissions, especially where 50% plus of energy is fossil fuel generated

High Energy Prices Coal is abundant and cheap

National Security Promote energy independence Reduce imported energy

TIPS Market DriversTIPS Market Drivers

Alternative Energy Study for DOW Chemical Plant, Freeport, Texas Primary energy source for Freeport Plant is natural gas High natural gas costs ($6 mBtu in 10/04) effecting Plant’s profitability “Non-Attainment” Status of Air Quality Prevented Use of Alternative Fuel Sources Alternative Fuel Source Must Equal or Exceed Existing Emissions To Implement

DOW asked ThermoEnergy to Calculate Energy Savings Using TIPS TIPS’ Zero Air Emission Capability Allowed Use of Alternative Fuels The Study Matched the Plant’s Energy Matrix Requirements w/ Then Current Fuel

Pricing Resulting in the following:

Texas LigniteTexas Lignite

Annual Energy SavingsAnnual Energy Savings: : $54,000,000$54,000,000

E. Texas High-Sulfur Pet CokeE. Texas High-Sulfur Pet Coke

Annual Energy SavingsAnnual Energy Savings: : $80,000,000$80,000,000

TIPS Case StudyTIPS Case Study

Dennis C. Cossey – Chairman & Chief Executive Officer• 38 Yrs. management experience in both public & private corporations, including IBM, Peter Kiewit & Sons United Capital Management, American Fuel and Power • Member of NY Academy of Science, American Chemical Society, National Safety Council

Shawn Hughes – President & COO CASTion Corporation• 25 Yrs. experience in management & operations for manufacturing and service industries including Compaq, NYNEX

Alex Fassbender, P.E. – EVP & Chief Technology Officer• Registered Professional Chemical Engineer with BS & MBA Degrees• Senior level scientist for Department of Energy National Laboratory System• NASA, 23 yrs. Pacific Northwest National Laboratory, 4 R&D 100 Awards, 12 Patents, 20 Scientific Articles

Andrew T. Melton - EVP & Chief Financial Officer• Certified Public Accountant, Certified Internal Auditor, MBA• Extensive financial reporting and acquisition experience• VP Merrill Lynch, SVP BancOklahoma, CFO Worthen Banking Group

David Delasanta - VP Sales & Marketing• 35 Yrs. experience in Environmental Engineering, Construction & Capital Equipment Industries• Marketing and operational experience including Shaw Group, IT, OHM, Metcalf & Eddy and ICF Kaiser• BS Physics, MA Engineering & MBA

Management Team Management Team

Highly visible markets with multiple addressable opportunities: Revenue potential in the hundreds of millions

Recent agreements established to accelerate development of TIPS process:

Babcock Power MOU to develop and implement TIPS technology in future power markets

Highly visible contracts for CASTion deployment: New York City contract to retrofit ARP technology in Jamaica Bay Approval implementation notice expected June 2008 Increasing pipeline for CASTion division for 2008

High gross margin businesses: Waste Water – 40% - 50%

Investment ConclusionsInvestment Conclusions

Thermoenergy Corp.Dennis Cossey, Chairman and CEO124 West Capitol AvenueSuite 880Little Rock, AR 72201Phone: 501-376-6477dennis.cossey@thermoenergy.comWeb Site: www.thermoenergy.com

Investor Relations Contacts:Alliance Advisors, LLCMark McPartland - 910-221-1827markmcp@allianceadvisors.netor Bryan Kobel - 212-398-3487bkobel@allianceadvisors.net