Axion Power(TM) Awarded Government Grant

Axion Power(TM) Awarded Government Grant to Help Develop, Deploy PowerCube(TM) Battery Energy Storage System for Smart Grid Technology

Axion Power International, Inc. (OTC Bulletin Board: AXPW), the developer of advanced lead-carbon PbC® batteries, today announced that it had been awarded a grant from the Pennsylvania Energy Development Authority. The grant will be used to assist in the development and deployment of an Axion PowerCube™ battery energy storage system using the Company’s proprietary PbC battery technology. The 500 kilowatt PowerCube will be built and installed at Axion’s New Castle battery manufacturing facility and will be designed to enhance a Smart Grid electrical distribution system, including a future solar-powered electric vehicle charging station and a potential wind powered energy system.

The $248,650 grant is part of $1.5 million in Pennsylvania state grant aid that is dedicated to "innovative green energy projects" announced recently by Gov. Edward G. Rendell. "These are the types of projects that are putting us on the road to energy independence," the governor’s office stated in the release.

Axion Power CEO Thomas Granville said the state grant reaffirms the environmental attributes and energy storage potential of the Company’s proprietary PbC battery technology, which forms the basis of the PowerCube.

"Our PbC battery technology can enhance energy storage capabilities within a viable Smart Grid electrical distribution system," Granville said. "This award gives us a chance to demonstrate the considerable promise of our PbC batteries as an enabling technology for a Smart Grid deployment. Our PbC battery will be used for power quality, peak demand reduction and as part of an electric car charging application. We look forward to working with our partners in demonstrating the effectiveness of our product."

The grant funds will be used to purchase a power conditioning system for the PowerCube from Eaton Corporation as well as other ancillary design and installation costs. The PowerCube can be configured with an Envision Solar CleanCharge™ solar powered electric vehicle charging station and designed to also allow future integration of a wind turbine system. Axion has an established business relationship with Envision Solar, a company that has deployed solar energy generating systems at UC San Diego, several McDonald’s franchises and other high-profile commercial sites around the country.

"A key attribute of the PowerCube is its ability to couple energy storage with solar and wind systems as an integral component of a Smart Grid, which should help increase the reach and market penetration of renewable energy," Granville added. "The PowerCube has been designed to capture the intermittent power generated by renewable energy producers like solar and wind, and to recover rapidly after an outage event. Last week’s completion of a $26M financing round for Axion will allow us to build additional carbon electrode production capacity to better serve, and more competitively serve, these emerging energy storage markets."

Axion Power International, Inc. has developed and patented a next generation energy storage device that won the prestigious Frost & Sullivan Technology Award for North America in the field of lead-acid batteries. According to Frost & Sullivan, Axion’s new PbC® batteries have "the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that is not well suited to the requirements of important new applications like hybrid electric vehicles and renewable power."

Axion Power International, Inc. is the industry leader in the field of lead-acid-carbon energy storage technologies. Axion believes this new battery technology is the only class of advanced battery that can be assembled on existing lead-acid battery production lines throughout the world without significant changes to production equipment and fabrication processes. It also believes it will be able to manufacture carbon electrode assemblies in volume at low cost using standard automated production methods that are commonly used in other industries. If and when its electrode manufacturing methods are fully developed, Axion believes it will be able to sell carbon electrode assemblies as virtual plug-and-play replacements for lead-based negative electrodes used by all other lead-acid battery manufacturers. Axion’s future goal, after filling their plant’s lead-carbon battery production capacity, is to become the leading supplier of carbon electrode assemblies for the global lead-acid battery industry.