Beacon Power To Lease Flywheel System to NorthWestern Energy

Beacon Power Corporation (Nasdaq: BCOND) has signed a lease agreement with NorthWestern Energy (NYSE: NWE) to supply a one-megawatt (1 MW) flywheel energy storage system.

The system will be installed by Beacon Power and operated in conjunction with Mill Creek Generating Station (MCGS), a gas-fired regulating reserve plant recently commissioned in Montana and owned by NorthWestern Energy. The system is expected to be operational by the end of 2011.

The initial term of the lease will be 15 months, which, at NorthWestern Energy’s option, can be extended up to two additional 12-month terms. NorthWestern Energy will pay Beacon $500,000 for the first 15-month term and $500,000 for each subsequent term should it choose to extend the lease to a second or third term. At any point NorthWestern Energy can opt to purchase the 1 MW system outright for approximately $4 million.

The Mill Creek Generating Station was recently placed in service to balance all loads and resources in NorthWestern Energy’s balancing authority area in Montana. It will also provide regulation service for variable energy resources that are part of NorthWestern Energy’s retail energy supply portfolio. "We’re looking forward to testing and evaluating the integrated operation of Mill Creek with Beacon’s flywheels to further optimize its performance and assess the potential value of adding more flywheel capacity on a permanent basis in the future," said Bob Rowe, President and CEO for NorthWestern Energy.

Beacon’s Smart Energy MatrixTM is a non-polluting, megawatt-scale, flywheel-based solution designed to provide 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 systems directly to utilities or grid operators in parts of North America and selected international markets.

Beacon Power has received funding from the US Department of Energy and NYSERDA. The company is installing a 20MW system in New York and a smaller system at a wind farm in California.