U.S. Department of Energy Offers $43 Million Loan Guarantee to Beacon Power for Flywheel Energy Storage Project
10:33a ET July 2, 2009 (Business Wire)
Beacon Power Corporation (Nasdaq: BCON) announced that it has received a conditional commitment from the U.S. Department of Energy (DOE) for a loan guarantee of approximately $43 million. The DOE's offer outlines terms for a loan that would finance more than 60% of Beacon's planned 20-megawatt (MW) flywheel-based energy storage plant to be located in Stephentown, New York. The plant, which will provide frequency regulation services, will help stabilize and enhance the performance of the grid. Its emission-free operation will also significantly reduce CO(2) levels, as compared to fossil fuel-based regulation methods used today.
The loan, which would be funded by the U.S. Treasury's Federal Financing Bank, is expected to provide debt financing for 62.5%, or $43 million, of the estimated $69 million total project cost. Approximately $50 million of this total cost is direct equipment and facility costs. Beacon's equity contribution of roughly $26 million will be provided by a combination of cash, in-kind assets, and other eligible project costs. Before the loan can be closed, the DOE's conditional commitment is subject to negotiation and completion of a number of contracts and conditions.
"We're extremely pleased by DOE's decision to issue a conditional commitment to Beacon Power for a loan guarantee for this 20 MW energy storage plant," said Bill Capp, Beacon president and CEO. "With this anticipated federal funding and expected plant construction, we will make a major transition from development and pilot operation of our flywheel technology to full-scale commercial deployment. For New York initially, and later other regions where plants could be built, it will also signal a dramatic shift to a cleaner, more sustainable method of providing frequency regulation on the grid."
Senator Edward M. Kennedy said, "Beacon Power's electricity storage system is exactly the type of technology the nation needs to meet the clean energy goals essential to a safe and sustainable future. With this strong support from the Department of Energy, this ground-breaking company will help lead the way forward."
Senator John F. Kerry said, "This loan guarantee is an example of how the federal government and Massachusetts technology pioneers like Beacon Power can create a partnership between government and industry to solve the greatest global challenge of the 21st century."
Congresswoman Niki Tsongas (D-MA) said, "Beacon Power is just the second company in the country to be offered a Department of Energy loan guarantee for innovative clean energy technologies. Their homegrown technology is helping to drive the clean energy revolution across the country, while creating outstanding new clean energy jobs in our community."
"We would like to thank the Obama Administration, in particular Energy Secretary Chu and his team, and the U.S. Congress for their foresight and dedication in making the loan guarantee program a reality," Bill Capp added. "This loan guarantee will enable the construction and start-up of our first full-scale commercial plant, and it confirms DOE's positive role in using energy policy to accelerate the deployment of advanced energy technologies."
Out of 143 pre-application submissions in late 2007, Beacon's 20 MW energy storage plant was one of just 16 projects invited to submit a full application for loan guarantee consideration. Of these 16 projects, Beacon's was the only one selected in the "Electricity Delivery and Energy Reliability" category.
For more information on frequency regulation and flywheels, please refer to this fact sheet: http://www.beaconpower.com/files/Flywheel_FR-Fact-Sheet.pdf
About the DOE Loan Guarantee Program
The DOE's Loan Guarantee Program was established pursuant to Title XVII of the Energy Policy Act of 2005. The Act authorized DOE to make loan guarantees for projects that "avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the U.S. at the time the issuance is guaranteed."
The purpose of the Program is to expedite the commercial use of new energy technology in the U.S. and to reduce emissions of greenhouse gases and other air pollutants. Beacon's 20 MW flywheel energy storage plant directly consumes no fuel and produces no emissions. The plant can provide the same frequency regulation services as conventional fossil-fuel generators, which produce greenhouse gas emissions that contribute to global climate change.
About Beacon Power
Beacon Power Corporation designs, develops and is taking steps to commercialize advanced products and services to support stable, reliable and efficient electricity grid operation. The Company's primary business strategy is to commercialize its patented flywheel energy storage technology to perform frequency regulation services on the grid. Beacon's Smart Energy Matrix, which is now in production, is a non-polluting, megawatt-level, utility-grade flywheel-based solution to provide sustainable frequency regulation services. Beacon is a publicly traded company with its research, development and manufacturing facility in the U.S. For more information, visit www.beaconpower.com.
Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995: This Material contained in this press release may include statements that are not historical facts and are considered "forward-looking" statements 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, financial performances, and project development. These "forward-looking" statements are identified by the use of terms and phrases such as "will," "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's expectation. These factors include: a short operating history; a history of losses and anticipated continued losses from operations; the complexity and other challenges of arranging project financing and resources for one or more frequency regulation power plants, including uncertainty about whether we will be successful in finalizing the DOE loan guarantee support for our New York facility, or complying with the conditions or ongoing covenants of that support; a need to raise additional equity to fund the project and Beacon's other operations in uncertain financial markets; conditions in target markets, including the fact that some ISOs have been slow to comply with FERC's requirement to update market rules to include new technology such as the Company's; our ability to obtain site interconnection approvals, landlord approvals, or other zoning and construction approvals in a timely manner; limited experience manufacturing commercial products or supplying frequency regulation services on a commercial basis; limited commercial contracts for revenues to date; the dependence of revenues on the achievement of product optimization, manufacturing and commercialization milestones; the uncertainty of the political and economic climate, and the different electrical grid characteristics and requirements of any foreign countries into which we hope to sell or operate, including the uncertainty of enforcing contracts, the different market structures, and the potential substantial fluctuation in currency exchange rates in those countries; dependence on third-party suppliers; intense competition from companies with greater financial resources, especially from companies that are already in the frequency regulation market; possible government regulation that would impede the ability to market products or services or affect market size; possible product liability claims and the negative publicity which could result; any failure to protect intellectual property; retaining key executives and the possible need in the future to hire and retain key executives; the historical volatility of our stock price, as well as the volatility of the stock price of other companies in the energy sector, especially in view of the current situation in the financial markets generally. These factors are elaborated upon and other factors may be disclosed from time to time in Beacon Power filings with the Securities and Exchange Commission. Beacon Power expressly does not undertake any duty to update forward-looking statements.
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SOURCE: Beacon Power Corporation
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