ISO New Englands Alternative Technologies Pilot Program allows Beacon to generate revenue for regulation services, while permanent market rules are developed. This process is expected to take approximately 18 months. If at the end of the 18-month period permanent rules are not yet in place, the pilot program and its revenue component will continue until such rules are in place.
The pilot program was approved by the Federal Energy Regulatory Commission (FERC) as part of ISO New Englands compliance with FERC Order No. 890. Order No. 890 is intended to promote greater competition in electricity markets, strengthen the reliability of the grid, and allow so-called non-generation resources (which include Beacons flywheel technology), to participate in regulation markets on a non-discriminatory basis.
As part of the process of modifying its market rules, ISO New England and Beacon will be working together to optimize performance by adjusting the control signal sent from the ISO to the Beacon Smart Energy Matrix. This fine-tuning by the ISO will allow it to maximize regulation effectiveness and will also determine the regulation service payments to be paid to Beacon. ISO New England has a multi-part payment model for regulation that is being adapted for application to energy storage-based regulation systems.
This is a major achievement in Beacon Powers history, and initiates the transition from a development-stage to a commercial company, said Bill Capp, Beacon president and CEO. With the growing deployment of renewable energy sources we are seeing strong interest in our regulation service from grid operators, federal policy makers and public utility commissioners. We look forward to steadily increasing our operational availability and to adding more capacity this year and next.
The 1 MW Smart Energy Matrix is located and running within Beacons Tyngsboro, Massachusetts, headquarters. Beacon has previously announced that it will connect an additional 2 MW to this system by the end of 2008, and add 2 MW more (for a total of 5 MW) in the first quarter of 2009. The additional 4 MW, which are now under construction, will be located adjacent to the Companys facility.