American Superconductor Demonstrates World's First HTS 5,000-Horsepower Electric Motor.

Business/Technology Editors

WESTBOROUGH, Mass.--(BUSINESS WIRE)--July 18, 2001

Patented, Ultra-Compact Design Expected to Open New Markets in

Energy Conversion

American Superconductor Corporation (Nasdaq: AMSC) today announced it has built and demonstrated the world's first 5,000-horsepower (hp), high temperature superconductor (HTS) electric motor. The company's patented, ultra-compact HTS electric motors (see http://www.amsuper.com/5000htsmotor.htm) are designed to reduce manufacturing costs of industrial and ship propulsion motors by up to 40 percent compared with conventional motors. The electrical losses of HTS motors, which utilize HTS wires instead of copper wires on the rotor, are also much lower, which translates into significant fuel savings and lower operating costs.

American Superconductor's prototype 5,000-hp HTS motor is about the size of a household refrigerator. It is as little as half the size and weight of a conventional 5,000-hp motor. Its net electrical losses, including losses associated with cryogenic cooling of the HTS wires, are up to half the electrical losses of a conventional motor.

Motors over 1,000 hp utilize approximately 25 percent of all electric power generated in the United States. The Department of Energy estimates that the lower electrical losses of HTS motors could save U.S. industry billions of dollars per year in electrical operating costs.

"HTS technology opens the door to radically new designs and market opportunities for electric motors and for the industrial and transportation systems in which they are utilized," said Greg Yurek, chief executive officer. "By delivering more power in a smaller package that operates with lower electrical losses at essentially the same price, we are creating entirely new value propositions for our customers."

Yurek added that American Superconductor's Electric Motors and Generators business is focused on development and commercialization of electric motors over 1,000 hp and electric generators over 10 megawatts. Electric generators involve essentially the same technology as motors. "We plan to field additional prototype motors and generators over the next two years and we are on track for commercial sales in 2004," he said.

Industry experts estimate that the current market for industrial electric motors with power ratings over 1,000 hp, used in applications such as pumps, fans and compressors, is approximately $1.2 billion per year worldwide. A major new market emerging for high-power electric motors is electric ship propulsion. According to industry experts, the current annual global market for electric motors utilized for electric propulsion in commercial cruise and cargo ships is approximately $250 million. The market for ship propulsion motors is expected to grow rapidly to over $1 billion per year by 2010 because electric drives are becoming the propulsion system of choice for both commercial and Navy ships. American Superconductor is currently working under a contract from the U.S. Navy's Office of Naval Research to design and develop HTS ship propulsion motors up to 33,500 hp for application in electric warships (see http://www.amsuper.com/navyupdate.htm). The company expects sea trials of its HTS ship propulsion motors by the end of 2003.

The HTS Advantage

American Superconductor's new 5,000-hp motor, an alternating current (AC) synchronous, "air-core" design, utilizes HTS wires for the field windings on the rotor instead of copper wires. The company's HTS wires carry over 140 times more electricity than copper wires of the same dimensions, a feature that has allowed radical design changes in industrial and ship propulsion motors, and in the systems in which these motors are employed. The HTS wires in these motors carry electricity with no electrical losses when cooled to cryogenic temperatures. A cryo-refrigerator is used to cool just the HTS windings. Including the power needed to operate the cryo-refrigerator, the electrical losses for HTS motors are up to half those of a conventional motor. Ultra-compact HTS motors, including the cryo-refrigerator, are one-half to one-fifth the size of conventional motors.

Technical Background

Superconductors are materials that carry large quantities of electricity with zero electrical resistance when cooled to very low or cryogenic temperatures. While superconductors have been known for decades, the only commercial application until recently was in medical magnetic resonance imaging (MRI) devices. These devices utilize low temperature superconductor (LTS) wires. In 1986, two IBM scientists discovered a new family of superconductor materials that still require cooling to cryogenic temperatures, but that operate at 5 to 20 times higher temperatures than the old LTS materials. The new materials, which are ceramic compounds, have become known as high temperature superconductors (HTS). The lower cost of cooling these new materials significantly enhanced the commercial economics of superconductor applications, and created the possibility of using high power density superconducting wires in electric power applications, such as power cables, motors and generators. American Superconductor has over 550 patents, patent applications and licenses worldwide related to the manufacture of HTS wires and the applications of superconductors to electric power applications.

American Superconductor

American Superconductor Corporation is a world leader in developing technologies and manufacturing products utilizing superconductor wire and solid-state power electronic switches for the electric power infrastructure. American Superconductor's products, and those sold by electrical equipment manufacturers that incorporate its products, can dramatically increase the bandwidth and reliability of power delivery grids, reduce manufacturing and operating costs, and conserve resources used to produce electric power. Founded in 1987, the company is headquartered in Westborough, Mass. For more information, visit http://www.amsuper.com.

Certain statements in this release, including statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions, constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include the uncertainties that: the company will be able to obtain the anticipated funding from corporate and government contracts; the company will be able to successfully develop and manufacture commercial products; a robust market will develop for the company's products; and the company will secure anticipated orders. Additionally such factors include: the risk that strategic alliances and other contracts may be terminated; the risk that certain technologies utilized by the company will infringe intellectual property rights of others; the competition encountered by the company, including several large Japanese companies; the amount and timing of the company's future cash requirements and the availability of satisfactory financing sources. Reference is made to these and other factors discussed in the "Management's Discussion and Analysis of Financial Condition and Results of Operation" section of the company's periodic reports filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent the Company's estimates as of July 18, 2001. While the Company anticipates that subsequent events and developments may cause the Company's estimates to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company's estimates or views as of any date subsequent to July 18, 2001.