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

Business Wire, April 29, 2008

Energy storage system will be paired with intelligent software agents to increase transmission line capacity and facilitate growth of wind power

TYNGSBORO, Mass. -- 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.