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"what a blackout can do"

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    News Release
    For Immediate Release

    VRB Power's Energy Storage System and the Northeast Blackout.

    VRB Power repreents Pinnacle VRB in USA and is a 70% shareholder in PCE

    We are all familiar with batteries and their role in allowing us to roam with laptops, cell phones and PDAs. Those in the computer industry are familiar with batteries and Uninterruptible Power Supplies, which are used to ride through voltage dips, and even localized interruptions in the power system. Why then can't we use large battery systems to store energy and support the nation's electricity grid? The technology to store large amounts of electrical energy is now available. VRB Power Systems Inc.'s Vanadium Redox Battery Energy Storage System ("VRB/ESS") is a technology that has been successfully applied in storing multiple megawatt hours of energy in what is called a flow battery.

    VRB Power's Energy Storage System operates such that it can deliver its stored energy and power in milliseconds - on demand. Along with long life cycles and high efficiencies, the electrolyte that stores the energy suffers little if no degradation, is environmentally friendly and completely recyclable. The system can be used for load leveling (peak shaving), grid stability enhancements, capital deferment, can be coupled with renewable energy sources such as wind and solar to provide firm capacity, utilized for electrical power arbitrage, and in the case of the recent blackouts in the Northeast and London, provide multiple hours of essential backup power. Certain innovative utilities such as PacifiCorp and Hydro Tasmania have already chosen to adopt the VRB Energy Storage System within their distribution networks - to store and deliver megawatt hours of energy more efficiently than any other system today.

    The US electrical power grid has operated until now with very few systems capable of storing energy and therefore incapable of riding through large scale events such as the wide spread outages that occurred on the East Coast in 1965 and 1977, in the Pacific Northwest in 1996, and more recently, in the Northeast the past few weeks. As it was pointed out by the Chairman of the Federal Reserve in a recent testimony to congress, this inability to store energy to act as a shock absorber is indicative of a business which has no inventory. Because of the nature of electricity, our electrical grid is one huge just-in-time inventory system. Consumption must be precisely balanced with supply. When it isn't, failures quickly domino through the grid. The VRB/ESS would provide what every other energy and commodity supply system has: inventory control through storage.

    Economically, without energy storage, electricity prices become more volatile and technically can result in events such as the recent Northeast blackout "Imagine how differently August 14th 2003 might have unfolded if electricity could have been injected into the grid at strategic locations," Jason Makansi, Executive Director of the Energy Storage Council has observed.

    How could VRB Power's Energy Storage System have helped in a power grid problem such as occurred recently in the Northeast? Quite simply - the energy stored in various forms would have been able to replace lost generation caused by transmission line trips. This would have been nearly instantaneous. It would have meant that instead of there being widespread outages, the impacts would have been far less pronounced and with proper planning and location of the energy storage systems, may have prevented the runaway cascade outage that did occur. It would certainly have reduced the recovery periods which were as long as 18 hours in some areas stemming from the issue of trying to balance loads with generation. Having VRB Power's Energy Storage Systems in place would have provided a cushion to sudden demand peaks and would have allowed a much more rapid recovery of the system.

    VRB Power's Energy Storage System is one that can inject large quantities of power and energy into the grid within milliseconds, aiding in the recovery from blackouts, or stabilizing the grid before failures cascade through the system. The VRB/ESS can either be deployed at large scale (tens of megawatt hours from each unit) or through a distributed network of smaller scale facilities. A proper combination of energy storage, distributed generation and FACTS (Flexible AC Transmission Systems) can "stiffen" the grid and raise its reliability without the need for extensive transmission line expansion. These approaches will be far less costly than wholesale transmission line upgrades and will be far more focused with less environmental impact.

    "It is time to acknowledge that one, among many, of the reasons our transmission system is outdated is that storage facilities are not generally considered in capacity planning and expansion. As investments, large scale energy storage systems will increasingly be valued based not on sale price, but on their ability to increase the investment options available to different classes of customers emerging in the wholesale electricity market" notes Makansi.

    VRB Power's Energy Storage System adds the vital piece that is intuitive to us all - real stored energy - just like the batteries we are all familiar with. Utilities can tailor the grid to meet specific needs and most importantly prevent such cascading effects that we saw in the Northeast blackout, August 14, 2003.

    VRB Power is listed on the TSX Venture Exchange ("VRB"), the OTC Pink Sheets ("VRBPF") Pinnacle VRB is PCE on the ASX

    Timothy Hennessy
    CEO, VRB Power Systems Inc. Director Pinnacle VRB
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