Beacon Power

Beacon Power Corporation (NASDAQ: BCON)

Energy Storage-based Grid Services

September 2008

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. 2

Beacon Investment Opportunity • Recurring revenue with high margins • Favorable pricing expectations • First commercial revenues expected in Q4’08 • Global market opportunity • Substantial barriers to entry for other sustainable technologies • Patent protected technology Recycle surplus electricity with minimal cost then monetize it for grid efficiency 3

Our Business Model • Provide services to grid operators: – When there is too much power on the grid, we store it in our advanced flywheel energy storage system – When there is not enough power on the grid, we discharge our system and put power into the grid – Because we recycle energy, our operating costs are low and we expect EBITDA margins of up to 80% – This balancing service, called “frequency regulation”, is required by grid operators around the world 4

What is Frequency Regulation? (A two-minute animation) Also available on www.beaconpower.com

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Build, Own and Operate Business Model • Selling services that are essential to the grid (24/7) • Serving large “open” and established markets • Endorsed by the customer (i.e. grid operators) • Achieves carbon reduction • NOT dependent on utilities • NOT dependent on selling equipment • NOT dependent on an “emerging” market • NOT dependent on subsidies 6

Beacon Smart Energy Matrix Advantages • • • • • •

Up to 100 times faster than incumbents Available separately – without generation High reliability; 20-year projected life Lowest operational cost Significant carbon emissions reduction Frees up generation capacity (1-3% potential)

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

500,000 400,000 300,000 200,000

8hr/day

100,000

8hr/day

Metric Tons CO2

600,000

0 Coal Peaker

Coal Baseload

Gas Peaker

Gas Baseload

Pumped Hydro

Beacon Flywheel

Over 80% reduction in CO2 emissions vs. present methods 8

Flywheel Product Evolution 2000

2001

2004

2006/2007

Gen 1

Gen 2

Gen 3

Gen 4

• Over 500,000 hours of operation in the field

2006/2007

2008

• Technology is product of 5 years of R&D and testing at a cost of $160 MM • Only company with the technology to produce flywheels that can be applied to the electrical grid Successful demonstrations in California and New York

Commercial operation and service revenue starts 9

1st Commercial Plant - Tyngsboro, MA • First MW 90% complete operational in September • Up to 5 MW in Tyngsboro, MA at Beacon’s headquarters • ISO-NE pilot program and first service revenues scheduled to begin November 18

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First 20 MW Plant – New York • First commercial 20MW flywheel energy storage plant under development in Stephentown, NY • Interconnection Process with NYISO – System impact studies expected by year-end

• Site permitting – Environmental and special use permits approved in July

• Land purchased in July • ISO developing control algorithm to optimize performance 11

U.S. Markets for Regulation Services

MISO

NY ISO

ISO New England PJM Interconnection

California ISO

ERCOT ISO

• Open frequency regulation markets: >$680 million (2007) • Midwest ISO market expected to open in 2008 • With MISO, open markets should be >$1 billion 12

Open U.S. Markets for Regulation Average MW Market Market Size

Average Pricing*

Market Status and Beacon Developments

ISO NE

130

$48

• Pilot program unanimously approved August 5, 2008, scheduled to begin on November 18, 2008

NYISO

220

$62

• Tailored market rules now under review by stakeholders • May also qualify to participate sooner as a generator, but with less favorable economics

PJM

1000

$61

• Market open

MISO

Est. 1000 (new open market)

N/A (new open market)

360

$37

• Stakeholder process developing tailored market rules for Energy Storage Resources • Expect higher price for fast response

N/A

• Not FERC regulated – less transparent • Highest wind penetration

CAISO

ERCOT Approx 100 and growing

• FERC ordered new tariff for Energy Storage Resources • MISO filed tailored tariff in May 2008 • Expect open market by June 2009

* Average 12 month prices paid by ISO/RTO per MW service hour through July 08 13

The California ISO Study • The California ISO study predicted that half of all renewable electricity generated would come from wind power • There will be an increased need for frequency regulation as wind power becomes a greater percentage of total electrical supply Total MW Produced at 20% Renewable Penetration Concentrated Solar, 1,411MW

Increased Need for Regulation from Wind Power

Residential Solar, 633MW

Biomass, 1,088MW

Geothermal, 3,041MW

Wind, 7,741MW

Source: Integration of Renewable Resources. California Independent System Operator. November 2007.

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Compelling Economics • 20 MW plant revenue/year = approx. $10 million (Based on 2008 NY-ISO pricing)

• 20 MW plant cost goal = $25 million (2010)* • Up to 80% EBITDA margin – zero fuel consumed, high efficiency and minimal maintenance required • Equipment designed for 20-year life • Additional revenue streams from carbon savings *First plant will be approximately 2x 15

Historical Balance Sheet June 30, 2008

(in thousands)

Cash and Cash Equivalents

$

Other Current Assets

December 31, 2007

16,685

$

30,417

2,698

1,982

12,673

7,004

Other Assets

200

374

Total Assets

32,255

39,778

4,210

3,579

–

–

Other Liabilities

945

–

Total Liabilities

5,155

3,579

Property and Equipment, net

Current Liabilities Long-Term Debt

Total Stockholders’ Equity

$

27,100

$

36,199 16

Historical Income Statement Six Months Ended 6/30

2008

(in thousands)

Revenue

$

2007

2007 48 $

Year Ended 12/31

842

$

1,389 $

2006 969

44

30

141

123

6,036

3,483

8,387

4,748

11,020

6,443

13,760

12,805

Operating Loss

(10,975)

(6,413)

(13,620)

(12,682)

Net Loss

(10,719)

(6,156)

(12,918)

(12,163)

Gross Profit R&D Expense Total Operating Expenses

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Clean-Tech Growth Opportunity • Key Take-Aways: • Disruptive Technology • Recycle surplus electricity • Increases efficiency of electrical power grids

• Now Going Commercial • After extensive R&D and testing, and vetting and approval by customers

• Open U.S. Grid Market exceeds $1 billion • Market Leader • No direct competitors using energy storage

• Substantial Barriers to Entry • Serving large “open” and established markets • Endorsed by the customers, i.e. grid operators • Clean-Tech • Achieves carbon reduction

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Beacon Power Corporation (NASDAQ: BCON)

Energy Storage-based Grid Services

September 2008