1 1 Beacon Power Corporation Energy Storage – Regulation Issues Prepared for: Emerging Technologies Working Group January 5, 2011

2 Safe Harbor Statement This presentation contains forward-looking statements, including the Company's beliefs about its business prospects and future results of operations. These statements involve risks and uncertainties. Among the important additional factors that could cause actual results to differ materially from those forward-looking statements are risks associated with the overall economic environment, the successful execution of the Company's plan of operation, changes in the Company's anticipated earnings, continuation of current contracts, changes in energy and other applicable regulations, and other factors detailed in the company's filings with the Securities and Exchange Commission, including its most recent Forms 10-K and 10-Q. In addition, the factors underlying Company forecasts are dynamic and subject to change and therefore those forecasts speak only as of the date they are given. The Company does not undertake to update them; however, it may choose from time to time to update them and if it should do so, it will disseminate the updates to the investing public. 2

3 Fast Regulation: Speed Matters… New Storage resources have a speed and precision of response which is unattainable by traditional generator ramp limitations Fast response capability demonstrated in ISO-NE, NY, CA, PJM, Midwest Slow ramping GeneratorAdvanced Energy Storagevs.

4 ERCOT’s Regulation Deployment Signal vs. ACE 10/27/10 LFC Test data: Actual system imbalance: ACE Up: +400 MW Down: -580 MW Average in one direction: 2 min Max in one direction: 24 min Regulation deployed to correct ACE Up: MW Down: -700 MW Average in one direction: 20 min Max in one direction: 94 min If ERCOT could respond instantaneously to ACE significantly less Regulation is needed Effective integration of Storage can lower procurement and result in savings for ratepayers

5 Studies confirm benefits of fast response storage for Regulation PNNL Study: Fast response technologies can help reduce the amount of regulation procurement required - Up to 40% in CAISO *Source: Makarov, Y.V., et al. “Assessing the value of Regulation Resources Based on Their Time Response Characteristics.” Pacific Northwest National Laboratory, PNNL – 17632, June 2008.

6 Integration of Storage Resources 1)Raise Ramp Limitation, and/or; 2)Fast Signal to Storage, and/or; 3)Allow Storage resources to manage their energy level using the 5-minute energy market Covered in this presentation: Covered in AES presentation:

7 Fast Regulation Signal for Storage CAISO developed ACE “Smoothing” Dispatch –Storage is used as “ACE Eraser” –Dampened Signal to slower units Recommend ERCOT do a similar dispatch –Send Storage a LFC signal based off the instantaneous ACE –Subtract Storage deployment from the current signal sent to Generators –Will provide further dampening

8 Dispatching Storage resources to utilize their fast response capability has several advantages Advantages for ERCOT Less Regulation Procurement More effective and tighter control Fewer emissions associated with Regulation Advantages for Storage Takes advantage of the ramp capabilities Energy neutral signal maintains resource “state-of-charge” Advantages for Traditional Generation Allows generation to cycle less frequently Reduced heat rate and fuel consumption Reduced wear and tear Dispatching Storage resources to utilize their fast response has advantages for ERCOT, Traditional Generators, and Storage resources

9 Using 5-minute Energy Market to Manage Stored Energy Level (SOC) Power EnergyPowerEnergy PJM AGC Data w/o 5-minute Correction PJM AGC Data w/ 5-minute Correction EPRI studied utilizing Limited Energy Storage to provide Regulation Allowing a Storage Resource to dynamically schedule energy in the 5-minute Energy market, if necessary, enables continuous Regulation Schedule energy into / out of the resource to maintain its preferred energy level, i.e. “state-of-charge” (SOC) Similar method implemented in other ISOs September 11, 2009 ERPI Webcast, Prototype Method for Analyzing Regulation by Limited Energy Storage Results: Regulation can have a significant energy bias (cumulative energy trend in one direction) Implementing a 5-minute adjustment to move the energy trend out of the Regulation signal and into the 5-minute energy market reduces the required duration of storage

10 Benefits of Dynamically Scheduling Storage: “Smart Following” Storage provides ERCOT with the ability to both respond to unpredicted energy imbalances and economically schedule this energy in the Energy market Allows imbalances to be reflected in price of energy (right market signals) Cannot be done today with Generators Example: When Reg Down is scheduled on a Generator it reduces its energy production but has no impact on marginal unit in Energy market; unlike Storage which stores this energy and then later discharges it in the Energy market resulting in the marginal unit being turned down or displaced Adjusted Load ForecastLoad ForecastLoad Regulation Down Forecasted Load Adjusted Load Forecast Power Regulation Energy 0 Forecasted Load Adjusted Load Forecast Power Regulation Up Regulation Energy Minutes Minutes Dynamically Scheduling Storage provides System and Resource benefits

11 Allow Storage to be a Dynamically Scheduled Resource Recommend ERCOT allow a QSE to Dynamically Schedule Storage Enable the QSE to update the Output Schedule for a Storage resource before each SCED Output Schedules for Dynamically Scheduled Resources (1)A QSE representing a DSR may update the Output Schedule for a dispatch interval at any time before the SCED process for that interval. Consistent with protocol rules for resources that need special scheduling considerations, like QFs and Intermittent Renewable Resources Protocol Changes : Protocol Section 2: Definitions and Acronyms Dynamically Scheduled Resource (DSR) A Resource that has been designated by the QSE, and approved by ERCOT, as a DSR status-type and that follows a DSR Load or is an Storage Resource with a ONDSRREG status. Protocol Section : Output Schedule Criteria (3) For a QSE representing one or more Dynamically Scheduled Resources, the sum of all Output Schedules (excluding Ancillary Services Energy deployments, energy deployed through Dispatch Instructions, and Energy Trades, and Energy used for Storage Resources with a Status of ONDSRREG) for the QSE must be within 15% or 15 MW (whichever is greater) of the aggregate telemetered DSR Load;

12 Contact Information Judith Judson Vice President, Asset Management and Market Development (978) Isaac Read Energy Systems and Market Analyst (978)