Beacon Power to Benefit from Changes in Midwest Frequency Regulation Market

Beacon Power Corporation (Nasdaq: BCON) is now able to compete on a favorable basis in the Midwest Independent System Operator (Midwest ISO) frequency regulation market, thanks to the latest in a series of supportive rulings by the Federal Energy Regulatory Commission (FERC).

On December 31, 2009, FERC approved the Midwest ISO’s market tariff for Stored Energy Resources, effective January 1, 2010. Beacon Power was an active participant in the filing and stakeholder review process, and was referenced by FERC in its ruling more than 30 times. FERC approved (and the final tariff incorporates) all significant elements of Beacon’s stakeholder comments, which were filed on June 2, 2009. As a result, when Beacon enters the Midwest ISO regulation services market the Company will be paid the maximum allowable amount for such services, in accordance with market prices paid to conventional fossil-fuel-based regulation providers.

“This latest ruling approving beneficial modifications to the Midwest ISO energy storage tariff is another example of the visionary leadership FERC has shown in support of new energy-saving technologies like Beacon’s, which help make the grid cleaner and more reliable,” said Bill Capp, Beacon president and CEO. “With FERC’s help and our own continued advocacy and intervention, we’ve gained market access and enhanced our revenue potential in four major U.S. electricity markets.”

Capp continued: “In New England, we’re earning revenue by providing 3 MW of flywheel regulation under a pilot program, and there has been good progress toward creation of favorable permanent market rules. In New York, we’ve broken ground on our first 20 MW plant, where newly implemented tariffs will allow us to be paid the maximum allowable for frequency regulation services, in accordance with market prices. In the PJM Interconnection, where we plan to build another 20 MW plant in Chicago, the regulation control signal was recently enhanced specifically for energy storage. This latest tariff approval is another favorable ruling that directly supports our business by promising lowered costs and increased revenues, along with delivering maximum system benefits to the Midwest ISO grid and ratepayers.”

Judith Judson, director of regulatory and market affairs for Beacon, added, “This new tariff not only opens the door for our Midwest ISO-sited flywheel energy storage plants to provide regulation services on that grid, it also maximizes what we can be paid. The decision exemplifies FERC’s commitment to leveling the playing field and allowing new technologies like Beacon’s flywheels to compete and be compensated equitably.”

In its decision, FERC stated: “We expect that the proposed tariff revisions will allow flywheel technology to participate in the Midwest ISO regulating reserve market as Stored Resources on a comparable basis to other resources that provide regulating reserves… We consider the operating requirements proposed by Midwest ISO for Stored Resources to be comparable to other resources providing Regulating Reserves because they must be deployable in a manner comparable to other resources and they must perform within the same response times as other resources. We also consider their compensation to be comparable to other resources.” [Page 12, para. 41-42]

FERC’s “Order on Compliance Filing and Stored Energy Resources Proposal” can be found here: http://www.ferc.gov/EventCalendar/Files/20091231141332-ER07-1372-014.pdf

About the Midwest ISO

The Midwest ISO is an independent, nonprofit organization that supports the constant availability of electricity in 13 U.S. states and the Canadian province of Manitoba. This responsibility is carried out by ensuring the reliable operations of the region’s interconnected high voltage power lines that support the transmission of more than 100,000 MW of energy in the Midwest, by administering one of the world's largest energy markets, and by looking ahead to identify improvements to the wholesale bulk electric infrastructure that will best meet the growing demand for power in an efficient and effective manner. The Midwest ISO was approved as the nation’s first regional transmission organization (RTO) in 2001. The organization is headquartered in Carmel, Indiana with operations centers in Carmel and St. Paul, Minnesota.

About Beacon Power

Beacon Power Corporation designs, develops and is commercializing advanced products and services to support stable, reliable and efficient electricity grid operation. Beacon’s Smart Energy Matrix, now in production, is a non-polluting, megawatt-scale, utility-grade, flywheel-based solution designed to provide less expensive, and more sustainable and effective, frequency regulation services to the nation's power grid. The Company’s business strategy is both to supply frequency regulation services from its own plants, and to sell its systems directly to utilities or grid operators in parts of North America and selected international markets. 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; 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; our need to comply with any disbursement or other conditions under the DOE grant program; a need to raise additional equity to fund Beacon’s projects and its other operations in uncertain financial markets; conditions in target markets, including the fact that it has taken longer than anticipated for some ISOs 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; 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.