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Beacon Power to Provide Flywheel System to Support Wind Power Integration Project in California

Posted on: Tuesday, 29 April 2008, 09:01 CDT

Beacon Power Corporation (NASDAQ: BCON), a company that designs and develops advanced products and services to support more stable, reliable and efficient electricity grid operation, announced today that it has been awarded a subcontract to provide a flywheel energy storage system in support of a wind integration R&D project sponsored by the California Energy Commission. Beacon will receive approximately $250,000 to offset R&D expenses and will contribute an additional $90,000 of engineering resources for the project, bringing the R&D total to approximately $340,000.

In addition to the California Energy Commission, which is funding the project, other leading stakeholders include Southern California Edison and the California Independent System Operator (ISO). The flywheel system will be installed in Tehachapi, California, a high-potential wind resource area where, according to a report from the California ISO, up to 4,200 megawatts (MW) of wind power may be added in the coming years.

In its November 2007 report entitled "Integration of Renewable Resources," the California ISO forecasted the need for hundreds of megawatts of additional frequency regulation capacity due to the impact of increasing wind deployment and its associated intermittency. Frequency regulation is a service that balances electricity supply and demand to maintain grid stability. Beacon Power's regulation plants can address this need, and Beacon has already successfully demonstrated this capability in California.

In addition to highlighting the use of energy storage for frequency regulation, the report outlines other changes that will be required on the California grid to achieve the state's goal of 20% renewable energy by 2010. These include the need to address transmission constraints. Beacon's flywheel energy storage systems may also have the potential to address shortages in transmission line capacity, which this wind power integration project is intended to prove.

The primary goal of the project is to demonstrate that advanced control technology with energy storage can help expand the delivery of renewable wind energy by effectively increasing the capacity of constrained transmission facilities in the Tehachapi area. This project supports California's goal to upgrade and expand its electricity transmission and distribution infrastructure per the state's Energy Action Plan of 2003.

According to Bill Capp, president and CEO of Beacon Power, "The potential for large-scale wind-related energy storage applications is quite significant. Beacon is pleased to be part of an R&D project whose goals include showing how our flywheel energy storage can be applied and controlled to increase transmission capacity and maximize the value of wind generation resources in California." Capp added, "The Tehachapi project is consistent with Beacon's interest in exploring and commercializing additional grid applications that have high cyclic requirements, move a great deal of energy through our flywheel systems, address a large and growing global market, and facilitate the deployment of renewable energy."

As a key subcontractor on the project, Beacon Power will work with the prime contractor, Alternative Energy Systems Consulting, and be responsible for implementing the energy storage portion of a system that:

Utilizes flywheel technology to improve the dynamic control of wind generation resources;

Coordinates energy production and delivery from wind generation in the Tehachapi region, and;

Demonstrates that such a system could expand the potential delivery of renewable energy and increase the capacity and use of transmission facilities in California.

The flywheel system used for the project will be the reconditioned scale-power Smart Energy Matrix that Beacon provided to the California Energy Commission in 2005-2007 to successfully demonstrate frequency regulation performance.

Project background

The Tehachapi Area is targeted for up to 4,200 MW of new wind generation capacity in the next five years. This growth will worsen existing transmission capacity constraints in that area. While transmission upgrades are planned, they will take years to complete. The California ISO's new Market Redesign and Technology Upgrade program is expected to address and work to lower some of the costs associated with existing transmission constraints. However, the ideal solution for these problems would include the ability to automatically control energy production from a wind generation area to take advantage of any unused transmission capacity available in real time, and decrease production for a transmission overload condition. Demonstrating this technical capability is one of the primary objectives of this project.

The engineering approach will include the application of "intelligent agent" software controls and Beacon's flywheel energy storage in an effort to find ways to deliver as much wind energy as possible without exceeding the limits of the locally constrained transmission system. "Intelligent agent" control technology has been identified as a key element of the U.S. Department of Energy's SmartGrid initiative.

About Beacon Power

Beacon Power Corporation designs, develops and is taking steps to commercialize advanced products and services to support stable, reliable and efficient electricity grid operation. The Company's primary business strategy is to commercialize its patented flywheel energy storage technology to perform frequency regulation services on the grid. Beacon's Smart Energy Matrix, now in development following approval for use in three of the country's five open-bid regulation markets, is designed to be a non-polluting, megawatt-level, utility-grade flywheel-based solution that would provide sustainable frequency regulation services. Beacon is a publicly traded company with its research, development and manufacturing facility in the U.S. For more information, visit www.beaconpower.com.

About Alternative Energy Systems Consulting

Alternative Energy Systems Consulting, Inc. (AESC) provides high quality energy engineering and management consulting services to enable rapid deployment of efficient, cost-effective, reliable, and environmentally friendly energy systems. AESC's customized technical solutions and services are provided to utilities, government agencies, and corporations that seek to improve energy production, delivery, and end use. Our development efforts include intelligent software agent technology, customized Visual Basic (VB), Excel, Access and SQL Server interface applications, as well as custom Java-based applications for interactive data display. AESC is a privately held company with four California offices located in San Diego, Carlsbad, Concord and Pasadena. For more information, visit www.aesc-inc.com.

Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995: This Material contained in this press release may include statements that are not historical facts and are considered "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Beacon Power Corporation's current views about future events and financial performances. These "forward-looking" statements are identified by the use of terms and phrases such as "believe,""expect,""plan,""anticipate," and similar expressions identifying forward-looking statements. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from Beacon Power Corporation's expectation. These factors include: a short operating history; a history of losses and anticipated continued losses from operations; a need to raise additional capital combined with a questionable ability to do so; the complexity and other challenges of arranging project financing and resources for one or more frequency regulation power plants, including uncertainty about whether we will be successful in obtaining DOE loan guarantee support for our New York facility; conditions in target markets, including the fact that some ISOs have been slow to comply with the FERC's requirement to update market rules to include new technology such as the Company's; our ability to obtain site interconnection or other zoning and construction approvals in a timely manner; no experience manufacturing any product or supplying frequency regulation services on a commercial basis; limited commercial contracts for sales to date; the dependence of sales on the achievement of product optimization, manufacturing and commercialization milestones; the uncertainty of the political and economic climate, and the different electrical grid characteristics and requirements of any foreign countries into which we hope to sell or operate, including the uncertainty of enforcing contracts, the different market structures, and the potential substantial fluctuation in currency exchange rates in those countries; dependence on third-party suppliers; intense competition from companies with greater financial resources, especially from companies that are already in the frequency regulation market; possible government regulation that would impede the ability to market products or services or affect market size; possible product liability claims and the negative publicity which could result; any failure to protect intellectual property, including the effect of the patent litigation recently initiated against us; retaining key executives and the possible need in the future to hire and retain key executives; the historical volatility of our stock price, as well as the volatility of the stock price of other companies in the energy sector. These factors are elaborated upon and other factors may be disclosed from time to time in Beacon Power Corporation's filings with the Securities and Exchange Commission. Beacon Power expressly does not undertake any duty to update forward-looking statements.

Source: Business Wire

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