SEVERANCE AGREEMENT BETWEEN GERARD A. ANDERSON AND PLUG POWER INC.

Exhibit 99.1

SEVERANCE AGREEMENT

AGREEMENT made as of July 12, 2007 by and between Plug Power Inc., a Delaware corporation with its principal place of business in Latham, New York (the “Company”), and Gerald A. Anderson (the “Executive”).

WHEREAS, as an inducement to the Executive to accept employment as the Chief Financial Officer of the Company, the Company has agreed to provide the Executive with certain severance benefits on the terms and subject to the conditions set forth in this Agreement.

1. Terminating Event. A “Terminating Event” shall mean a termination by the Company of the employment of the Executive with the Company for any reason other than (i) a willful act of dishonesty by the Executive with respect to any matter involving the Company or any subsidiary or affiliate, or (ii) conviction of the Executive of a crime involving moral turpitude, or (iii) the gross or willful failure by the Executive to substantially perform the Executive’s duties with the Company, which failure is not cured within thirty (30) days after a written demand for substantial performance is received by the Executive from the Board of Directors of the Company (the “Board”) which specifically identifies the manner in which the Board believes the Executive has not substantially performed the Executive’s duties, or (iv) the failure by the Executive to perform his full-time duties with the Company by reason of his death or Disability. For purposes of clauses (i) and (iii) of this Section 1(a), no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Company and its subsidiaries and affiliates. For purposes of this Agreement, “Disability” shall mean the Executive’s incapacity due to physical or mental illness which has caused the Executive to be absent from the full-time performance of his duties with the Company for a period of six (6) consecutive months if the Company shall have given the Executive a Notice of Termination and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of his duties.

2. Severance Payment. In the event that a Terminating Event occurs during the term of this Agreement, then

(a) the Company shall pay to the Executive an amount equal to the sum of (A) 1.0 times the Executive’s annual base salary in effect immediately prior to the Terminating Event, plus (B) 1.0 times the Executive’s annual bonus for the fiscal year immediately prior to the Terminating Event, payable in one lump-sum payment no later than five (5) days following the Date of Termination; and

(b) all unvested equity awards (including options to acquire the Company’s common stock and restricted stock awards for shares of the Company’s common stock) held by the Executive shall accelerate vesting by one year; and

(c) the Company shall pay to the Executive all reasonable legal and arbitration fees and expenses incurred by the Executive in obtaining or enforcing any right or benefit provided by this Agreement, except in cases involving frivolous or bad faith litigation.

Notwithstanding anything herein to the contrary, if at the time of the Executive’s “separation from service” (as defined in Section 409A of the Code) with the Company the Executive is a “specified employee” (as defined in Section 409A of the Code), then the Company will defer the payment of any amounts due hereunder (without any reduction in such amounts ultimately paid or provided to the Executive) to the extent they constitute “deferred compensation” (as defined in Section 409A of the Code) until the date that is six months following the Executive’s “separation from service.”

3. Term. This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) the termination by the Company of the employment of the Executive because of (i) a willful act of dishonesty by the Executive with respect to any matter involving the Company or any subsidiary or affiliate, or (ii) conviction of the Executive of a crime involving moral turpitude, or (iii) the gross or willful failure by the Executive to substantially perform the Executive’s duties with the Company, which failure is not cured within thirty (30) days after a written demand for substantial performance is received by the Executive from the Board which specifically identifies the manner in which the Board believes the Executive has not substantially performed the Executive’s duties, or (iv) the failure by the Executive to perform his full-time duties with the Company by reason of his death or Disability, or (b) immediately prior to a Change in Control (as defined in the Executive Severance Agreement dated as of the date hereof by and between the Company and the Executive (the “Executive Severance Agreement”)).

4. Withholding. All payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

5. Notice and Date of Termination; Disputes; Etc.

(a) Notice of Termination. During the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 5. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate