New Investment Report Highlights $360-Million Market for Power Grid Frequency Regulation Services in the U.S.
Tuesday April 5, 4:03 pm ET
Ardour Capital Investments Cites Expected Growth and Greater Opportunities for New Service Providers in an Increasingly Open Market
WILMINGTON, Mass.--(BUSINESS WIRE)--April 5, 2005-- The market for grid frequency regulation services open to new service providers in the United States in 2004 was valued at nearly $360 million - and is expected to increase in 2005 - according to a Technology Brief issued today by Ardour Capital Investments, LLC. Frequency regulation is the target market for Beacon Power's (Nasdaq: BCON - News) Smart Energy Matrix flywheel energy storage system, two demonstration systems of which are being built under contract to the California Energy Commission (CEC) and the New York State Energy Research and Development Authority (NYSERDA). The Technology Brief is available online at www.ardourcapital.com, under "Ardour's Energy Tech Updates."
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According to the report, the U.S. frequency regulation market today is characterized by increased visibility, greater accessibility to new service providers, and continuing expansion. Since the start of industry deregulation in the 1990s, a number of the Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) who run the power grid have opened up their markets to new entrants in order to provide greater competition, lower cost, and improved service. The report focuses on four of these markets, representing approximately 28% of the total U.S. power market (by megawatts), which are now accessible to independent providers of frequency regulation services.
"This report validates our own frequency regulation market research," said Bill Capp, Beacon Power president and CEO. "Based on this data and our ongoing product and technology development, we are confident that our Smart Energy Matrix design is ideally suited to address a market that is strong, growing, and available to new participants - such as Beacon Power. The two contracts we recently signed with the CEC and NYSERDA call for us to demonstrate that flywheel energy storage systems are not only a viable alternative to conventional frequency regulation methods, but also cleaner, better-performing, and more cost-effective."
Continued Market Growth Driven by Multiple Factors
The Ardour Capital report states that as the industry evolves, additional ISOs and RTOs are expected to follow suit and allow access to their frequency regulation markets - beginning later this year with the Midwest ISO. The other currently accessible frequency regulation markets (with corresponding 2004 market sizes) are: ISO New England ($38.0 million); New York ISO ($42.4 million); California ISO ($99.7 million); and the PJM Interconnection ($178.5). According to the report, "...as other regions of the country develop their own RTO power markets, readily accessible markets for frequency regulation could continue to increase for many years." The report also states that the pricing for such services is directly linked to the price of electricity, which is also trending upwards.
The frequency regulation market is expected to receive a further boost as more wind power generation is deployed, in response to statewide Renewable Portfolio Standards (the percentage of a state's power that must be generated from renewable resources). Because of its more competitive costs, wind power has become the predominant renewable resource being implemented. From a performance standpoint, wind is less stable and subject to greater fluctuations than other generation sources. In addition, as wind assets are deployed, they often replace older generation systems that normally provide frequency regulation services in their area. These trends are expected to increase the need for frequency regulation services in areas where wind is used.
About Frequency Regulation
One of the most challenging aspects of today's electricity grid is that the amount of power generated and the amount consumed must be in exact balance at all times. When imbalances occur, the frequency of electricity (60 hertz in the U.S.) that end users require will not be maintained, which adversely affects grid stability. The constant balancing of power demand and production to maintain a constant frequency is called frequency regulation.
Beacon's Smart Energy Matrix is a flywheel-based energy storage system that is intended to be a long-life, environmentally friendly solution for frequency regulation, with no fuel consumed and no emissions generated. The equipment could be located nearly anywhere, including at a substation or within the distribution system, where additional benefits such as voltage regulation, backup power, or reactive power can also be provided for even greater value.
About Ardour Capital Investments, LLC
Ardour Capital Investments, LLC provides a wide range of financial services for both public and private growth companies. Ardour provides investors that specialize in small capitalization growth companies a truly independent brand of research not traditionally found within the securities industry. Ardour has made a commitment to be a leading research institution in the Energy Technology/Alternative Power sector. More information is available at www.ardourcapital.com.
About Beacon Power Corporation
Beacon Power Corporation designs sustainable energy storage and power conversion solutions that would provide reliable electric power for the utility, renewable energy, and distributed generation markets. Beacon's Smart Energy Matrix is a design concept for a megawatt-level, utility-grade flywheel-based energy storage solution that would provide sustainable power quality services for frequency regulation, and support the demand for reliable, distributed electrical power. Beacon is a publicly traded company with its research, development and manufacturing facility in the U.S. More information is available at www.beaconpower.com.
Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995:
Material contained in this press release may include statements that are not historical facts and are considered "forward-looking" 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 and financial performances. These forward-looking statements are identified by the use of terms and phrases such as "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 Power Corporation's expectation. These factors include: a short operating history; a history of losses and anticipated continued losses from operations; a need to raise additional capital combined with a questionable ability to do so; conditions in target markets; no experience manufacturing any product on a commercial basis; the company has only recently entered into the renewable energy market through its inverter products, and hence, has only limited experience in this sector; the dependence of sales on the achievement of product development and commercialization milestones; the uncertainty of the political and economic climate of any foreign countries into which Beacon hopes to sell, including the uncertainty of enforcing contracts and the potential substantial fluctuation in currency exchange rates in those countries; significant technological challenges to successfully complete product development; dependence on third-party suppliers; intense competition from companies with greater financial resources; possible government regulation that would impede the ability to market products; possible product liability claims and the negative publicity which could result; any failure to protect intellectual property; the possible need in the future to hire and retain key executives; the recent volatility in the stock price of companies operating in the same sector; the power of controlling shareholders and the limited ability of others to influence the outcome of matters put to the vote of shareholders. These factors are elaborated upon and other factors may be disclosed from time to time in Beacon Power Corporation's filings with the Securities and Exchange Commission. Beacon Power Corporation expressly does not undertake any duty to update forward-looking statements.
Contact:
Beacon Power Corporation
Gene Hunt, 978-694-9121
hunt@beaconpower.com |
