Ener1 and JSC Mobile GTES sign strategic five-year framework agreement

NEW YORK, USA & ST. PETERSBURG, RUSSIA: Ener1 Inc. and Russia's JSC Mobile GTES, a whole-owned subsidiary of the Federal Grid Company (FGC) of Unified Energy System (MICEX: FEES), have signed a strategic framework agreement to contemplate the manufacture of lithium-ion-based uninterruptible power supply (UPS) systems as part of a five-year engineering and framework agreement.

The proposed UPS systems -- which the companies anticipate will have an initial total capacity of 27.8 MW -- will provide back-up power for internal substation needs for one hour, including switchgear, lighting, communications and other needs. FGC believes this lithium-ion solution will have expanded capabilities beyond the company's current lead acid solution, which is only able to back-up the switchgear for a short duration and does not provide back-up power for any other internal substation needs.

Ener1 and MGTES previously signed a $40-million energy storage supply contract in November 2010. This new framework agreement follows a new Memorandum of Understanding (MOU) signed by both companies in March 2011. The purpose of the framework agreement is to set forth the parameters of what is contemplated to be a five-year supply arrangement. The effectiveness of the agreement is contingent upon specific conditions, including the parties negotiating and determining the number of units to be supplied, unit pricing, services to be provided, completion of a feasibility study, board of director approval by both companies, and finalization of other technical specifications.

The contemplated UPS systems are intended to provide near-instantaneous power back-up for FGC's substation equipment to enable a more reliable bulk power transmission system. Coupled with Ener1's battery management system, the UPS systems constitute a crucial element of FGC's 'smart' grid, which will enable electric power production, transmission and consumption to be controlled and optimized in real-time with a view toward ensuring maximum performance. MGTES would handle the on-site delivery, installation and subsequent operation of the UPS systems.

“We are planning to deploy 45 units over two years from western Russia to the country’s Far East,” stated Oleg Bragin, general director, Mobile GTES. “This is a genuinely innovative project that will bring the level of development of the Russian energy industry, as a whole, to a qualitatively new level.”

"We're pleased to be working with FGC and MGTES to provide grid energy storage solutions that we believe offer a quick and highly cost-effective way to address some of the power quality challenges on the company's electric grid," stated Ener1 chairman and CEO Charles Gassenheimer.

"Russia, and other emerging markets, has the opportunity to surpass technologies used elsewhere, because their need to innovate is so essential and their networks are already stretched thin. With more than 800 substations being proposed to receive UPS system upgrades, we believe leveraging the advantages of advanced, lithium-ion batteries for grid energy storage could make smart business sense."

The strategic framework agreement between the two companies was signed during the fifteenth-annual St. Petersburg International Economic Forum, which is one of the world's leading events to bring together prominent government leaders and officials, corporate executives and industry experts to deliberate on key issues of the global economy.