Beacon Power CorporationBeacon Power CorporationFlywheel-basedFlywheel-based

Frequency Regulation Services Frequency Regulation Services

Prepared for:Prepared for:

NE-ISO Market CommitteeNE-ISO Market Committee

October 9, 2007October 9, 2007

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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 gaming 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.

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Who Is Beacon Power?

• Provider of flywheel-based regulation services

• NASDQ listing: BCON

• Based in Wilmington, MA

• ~ 50 employees

• 10-years in development; $160 million invested

• Technology approved by CAISO, NYISO, PJM

Demonstration Unit – Outside View

• Tested in California for 18 months; used live ISO signal

• Tested for 12 months in New York following frequency

• Independently monitored by DOE, Sandia National Labs

• Very high system availability

Results – Typical Response - August 2,2006

-120

-80

-40

0

40

80

120

12:00:00AM

2:24:00 AM 4:48:00 AM 7:12:00 AM 9:36:00 AM 12:00:00PM

2:24:00 PM 4:48:00 PM 7:12:00 PM 9:36:00 PM 12:00:00AM

Time of Day

Reg

ulat

ion

Sig

nal &

Reg

ulat

ion

Effe

ct (

kW)

Regulation Signal Regulation Effect

Beacon Power Inc. Proprietary Information

Abs

orbi

ng F

rom

Grid

Inje

ctin

g to

Grid

Demonstration Unit – Inside View

• Certified by CAISO December, 2006

• Qualified by NYISO March 2007

• Approved by PJM Interconnection June 2007

Commercial Status

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U.S. Markets for Regulation Services

• Open frequency regulation markets: >$650 million (2006)

• Midwest ISO market expected to open in 2008

California ISO

ERCOT ISO

NY ISO ISONew England

PJM Interconnection

MISO

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Flywheel Regulation Advantages

Smart Energy Matrix• Full response to signal in four seconds• Available separately – without

generation• Low operational cost (no fossil fuel)• Zero carbon emissions• High reliability; 20-year projected life• Frees generation capacity (1- 3%)

CO2 ReductionM

etr

ic T

on

s C

O2

From KEMA study: 20 MW of Regulation over 20-year operating life

0

100,000

200,000

300,000

400,000

500,000

600,000

Coal Peaker Coal Baseload Gas Peaker Gas Baseload Hydro BeaconFlywheel

Up to 80% reduction in CO2 emissions vs. present methods

8hr/

day

8hr/

day

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10

Flywheel Product Evolution

Gen 1Telecom

2000

Gen 2Telecom

2001

Gen 3Grid

2004

Gen 4Grid

2006/2007

• Over 500,000 hours of operation in the field

2006/2007

Successful demonstrations in California and New York

Apr 2008

Service revenue starts

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Smart Energy Matrix 20 MW Plant

(Preliminary design)

See animation at www.beaconpower.com

Outdoor Substation-Style Design

• Flywheels mounted in pre-cast housings

• Factory-built 1-MW modules

• Minimal on-site construction

• Reduce cost and time to build

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Achievements and Milestones

• 2006 DOE contract to design 20 MW regulation plant

First operation of Smart Energy 25 flywheel

• Apr 08 First service revenues (1 MW)

• Q4 08 10 - 20 MW capacity in service

• Sep 07 $10 million new investment

Smart Energy 25 achieves full performance

• Q1-2 07 $10.6 million new investment

Approved for grid connection in CA, NY, PJM

Complete 20 MW plant design, choose location

• Nov 07 Open new HQ/manufacturing facility

• Jan 08 Commercial production in new facility

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FERC Perspective

FERC Rule 890• Designed to help insure nondiscriminatory grid access,

create more openness and transparency in grid operation, promote competition in power markets and strengthen the reliability of the power grid

• Specifically calls for:– Use transmission more efficiently by eliminating artificial

barriers to use of the grid– Facilitate use of and access to clean energy resources – DSM must get equal treatment to generation; don’t call

regulation “AGC” anymore

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Challenges to Market Entry

• Must be a “generator”• Minimum regulating range of 10 MW• EMS software changes required at ISO

– Signal today is only positive number– EMS software resources limited due to upcoming Capacity

Market launch