PJM Interconnection has approved Beacon Power's flywheel technology for use as a frequency regulation resource in its region.

PJM Vice President, Markets, Andrew Ott, said in a letter received by Beacon that: "Following PJM's initial collaboration with Beacon Power in 2003 to help define key operating design parameters for flywheel-based frequency regulation, Beacon Power has now successfully demonstrated the efficacy of its flywheel technology in both California and New York. Independent verification of the performance results of both demonstration systems provided by the U.S. Department of Energy added to our confidence in approving Beacon Power's flywheel technology for commercial use within the PJM Interconnection."

Ott also stated that, "In approving this new technology, we recognize there are a number of important potential benefits. These include increased market competitiveness, technology diversity, and the potential for reducing CO2 greenhouse gas emissions. We look forward to working with Beacon Power to help integrate your flywheel-based frequency regulation resources into our markets and operations, and to evaluating what potential fast-ramping regulation may provide when compared to conventional regulation technologies."

Bill Capp, Beacon Power president and CEO, said, "We are very pleased that PJM has approved Beacon's flywheel technology for commercial frequency regulation. PJM is one of the world's largest grid operators and is a highly innovative, award-winning organization. In 2006, a year in which they set a new world record for amount of electricity delivered, PJM operated the largest open-bid frequency regulation market in the United States."

Capp continued, "Beacon Power's flywheel technology has now been qualified by three of the country's five open-bid electricity markets: California, New York, and the PJM Interconnection, which collectively serve more than 100 million electricity users. These approvals give us multiple options for where to build our initial frequency regulation plant in 2008."

The planned location of Beacon's first frequency regulation plant is expected to be announced before the end of September 2007. This timing will allow Beacon to complete the associated site acceptance process, including securing all permits and licenses per local and national codes, in order to provide the Company's first megawatt of commercial service by the end of April 2008.