Ener1 Signs Strategic Energy Storage Agreement with Russian National Grid Operator

ENER1, Inc. (Nasdaq: HEV), a leading manufacturer of electric vehicles and utility-scale lithium-ion battery energy storage systems, has signed a strategic cooperation deal with a division of the Russian Federal Grid Company (FGC) to co-develop storage systems under a nation-wide grid modernization program. An equipment-supply, business and technical consulting contract has been signed for $40 million. The Russian government has funded the update of the country’s power transmission infrastructure at a level of $15 billion through 2012.

"This is a unique opportunity for an American company to get in on the ground floor of Russia’s historic shift toward energy efficiency as a full-fledged partner," said Bruce Curtis, President of Ener1 Grid Storage. "FGC is in a leap-frog mode to incorporate lithium-ion storage technology for multiple uses in an overhaul of what is one of the world’s largest bulk power grids. Russia is the largest country in the world and we believe this contract is only the beginning for us there."

The initial phase of cooperation is underway and scheduled for completion in Q2 next year. It focuses on grid integration of large-scale emergency power back-up systems in economically critical regions, specifically the Black Sea port city of Sochi, selected as the official site of the XXII Winter Olympic Games in 2014. Installations are being custom designed for exacting operational conditions and placement at remote grid substations in the Western Caucasus Mountains ski resort Krasnaya Polyana. The purpose is to maximize reliability of the power supply for Olympic events.

The supply contract was signed with state-run FGC’s wholly owned subsidiary Mobile GTES, Russia’s leading manufacturer of mobile electric power stations. In addition to the design and manufacture of the specialized Sochi energy storage units, the contract includes two in-depth joint studies involving Ener1 and FGC engineers covering:

* System-wide assessment for deployment of lithium-ion storage for applications including strengthening the grid in remote regions, peak load-shaving and future integration of intermittent renewable power sources such as wind;
* Feasibility of localization within Russia of development and manufacture of lithium-ion battery cells and other components for energy storage systems.

"Energy efficiency in the national power transmission system is a top priority for our company," said Federal Grid Company CEO Oleg Budargin. "We are pleased to be collaborating with a leading U.S. maker of lithium-ion grid storage systems to establish the maximum advantage this technology can offer for increasing the reliability of power delivery to our customers across the country."

"We view this strategic cooperation as an opportunity to deliver unprecedented value in the history of the global lithium-ion energy storage industry," said Ener1 Chairman and CEO Charles Gassenheimer. "We are deeply committed to providing the highest level of responsiveness and innovation to help FGC achieve the goals of their sweeping modernization of the Russian national power grid."

Ener1, Inc. is a publicly traded (Nasdaq:HEV) energy technology company that develops lithium-ion-powered battery solutions for the transportation, grid energy storage and consumer markets. The company has over 700 employees, is headquartered in New York, with manufacturing locations in the United States and Korea. Ener1 develops commercial fuel-cell products through its EnerFuel subsidiary and nanotechnology-based materials and manufacturing processes through its NanoEner subsidiary. In collaboration with strategic partner and electric vehicle manufacturer, THINK, Ener1 also manufactures electric vehicle drivetrain products.

Open Joint-Stock Company Federal Grid Company of the Unified Energy System provides unified national electric grid management to the power industry in the Russian Federation. It offers energy transmission services; technical connection services, including services for electric power consumption (delivery), as well as providing actual connection of consumers’ electric devices to the electric grid facilities to legal entities and individuals; and technical maintenance and repair of facilities in the unified national electric grid system. The company also invests in and develops the unified energy system.

Joint-stock company Mobile GTES is a wholly owned subsidiary of Federal Grid Company. It was established in 2006 to deploy and operate mobile gas turbine power stations with a view to maintaining the reliability of the Moscow region’s power grid at peak hours in the most effective, safe and ecologically pure manner. Mobile GTES was also created to be able to promptly relocate such power plants to remote regions of Russia with inadequate electricity supplies. The company possesses vast experience in commissioning and operating mobile gas turbine powerplants and selling capacity and power on the wholesale market.