Beacon Power Flywheel Systems Now Earning Massachusetts Alternative Energy Credits

October 22, 2009 1:23 PM EDT

Additional Revenue Expected Thanks to Emissions-free Operation

TYNGSBORO, Mass.--(BUSINESS WIRE)-- Beacon Power Corporation (Nasdaq: BCON) announced that its Tyngsboro-based flywheel energy storage systems, which have been generating revenue for nearly a year by providing frequency regulation services on the New England power grid, have been approved to earn alternative energy credits under the Massachusetts Alternative Energy Portfolio Standard (APS) program. Beacon's flywheel systems were designated as the first resources to qualify under the APS program by the Massachusetts Department of Energy Resources.

Beacon's flywheels are eligible for the program because they store and discharge electricity - effectively recycling it to and from the power grid - to provide frequency regulation with zero fuel consumption or emissions. Thanks to their clean operation (as compared to fossil-fuel power plants that provide the same service), Beacon has begun earning state-authorized APS credits, or certificates, starting from the second quarter of 2009.

The number of certificates Beacon will earn is based on a formula that takes into account the amount of stored energy the systems inject into the grid, as well as the energy withdrawn from the grid for storage. The Company plans to sell the credits to utilities or other retail electricity suppliers that need to meet mandated Massachusetts APS requirements, thus creating an additional revenue source. Beacon is currently evaluating how much the APS certificates may be worth and how to sell them in the most effective manner.

"We're very pleased that our flywheel systems have been accepted into the state's APS program," said Bill Capp, Beacon president and CEO. "This positive development is consistent with our belief that as carbon trading markets develop at a state or national level, our regulation plants will be in a strong position to qualify for extra revenue given their clean, emissions-free operation. Massachusetts is the first state to formally recognize the carbon reduction benefit of Beacon's technology and provide compensation for that added value. We expect that other states will follow on the way to the eventual creation of a national carbon trading market."

Beacon Power has two megawatts of fast-responding flywheel energy storage performing frequency regulation at the Company's headquarters in Tyngsboro, Massachusetts, as part of a pilot program conducted by the regional grid operator, ISO New England. The Company expects to have a third megawatt in operation in Tyngsboro by year end. Beacon began earning revenue from its first one-megawatt system in November 2008, and doubled that capacity in July 2009. The flywheel systems in operation thus far have been running under ISO New England control with greater than 98% availability; that is the percentage of time they are responding to ISO control signals and providing frequency regulation service.

The Massachusetts APS mandates that a certain percentage of electricity generated for use in the state be derived from alternative sources, such as combined heat and power or flywheels. The goal of the APS program, which was signed into law as part of the state's landmark Green Communities Act in July 2008, is to reduce overall greenhouse gas emissions and encourage commercial development of certain alternative energy technologies. Utilities can demonstrate that they have complied with the program's requirements by investing in or contracting for alternative energy resources, and/or by purchasing APS certificates obtained by alternative energy companies, including Beacon Power.

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, which is now in production, is a non-polluting, megawatt-level, utility-grade flywheel-based solution to 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.

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, financial performances, and project development. These "forward-looking" statements are identified by the use of terms and phrases such as "will," "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's expectation. These factors include: a short operating history; a history of losses and anticipated continued losses from operations; uncertainties relating to the success of Beacon's DOE grant proposals; 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 finalizing the DOE loan guarantee support for our Stephentown, New York, facility, or complying with the conditions or ongoing covenants of that support; a need to raise additional equity to fund the project and Beacon's other operations in uncertain financial markets; conditions in target markets, including the fact that some ISOs have been slow to comply with FERC's requirement to update market rules to include new technology such as the Company's; our ability to obtain site interconnection approvals, landlord approvals, or other zoning and construction approvals in a timely manner; limited experience manufacturing commercial products or supplying frequency regulation services on a commercial basis; limited commercial contracts for revenues to date; the dependence of revenues 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; 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, especially in view of the current situation in the financial markets generally. These factors are elaborated upon and other factors may be disclosed from time to time in Beacon Power filings with the Securities and Exchange Commission. Beacon Power expressly does not undertake any duty to update forward-looking statements.

    Source: Beacon Power

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