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American Superconductor Announces New SMES Product; D-SMES Product Line to Enhance Reliability and Capacity of Electric Transmission Networks.

BOSTON--(BUSINESS WIRE)--Feb. 9, 1999--American Superconductor Corporation (Nasdaq:AMSC) today announced a new product, called Distributed-SMES, or D-SMES(TM), that will help assure reliability throughout large-scale electric transmission networks by continuously monitoring the networks and instantaneously injecting power to compensate for momentary dips in voltage.

The D-SMES units, approximately the size of a truck trailer, are based on ASC's proprietary superconducting magnetic energy storage (SMES) technology, which eliminates factory shutdowns caused by momentary sags in electrical voltage on power lines. American Superconductor has accumulated more than 25 years of operating experience with industrial power quality SMES products.

By broadening the application of SMES technology from factories to transmission networks, the D-SMES units will enable networks to rapidly return to a stable operating condition, thereby avoiding wide scale power failures. D-SMES units will also enhance the power transfer capabilities of existing networks without costly investment in new transmission facilities.

"Our entry into the power transmission market with D-SMES represents an exciting new opportunity for significant revenue growth for American Superconductor," said Greg Yurek, president and chief executive officer of American Superconductor, who announced the D-SMES product at the BT Alex. Brown Electric Utilities Conference here. "We anticipate receiving our first order from an electric utility for D-SMES within the next four months."

"Because these units will be installed in large-scale transmission networks, typically involving hundreds of miles of transmission lines, we anticipate that each order will require multiple SMES units distributed strategically throughout the network," Yurek continued. "The network analyses we have performed in conjunction with utilities have demonstrated that our D-SMES solution is the most efficient, reliable and economic for voltage stability problems."

Yurek added that the company is in the process of investing in a major expansion of its Power Quality Solutions Business Unit. "While we anticipate a growth in sales for SMES directed to solving industrial power quality problems, our business unit is now being structured to also address the increasing need in today's changing utility environment to maintain the stability of transmission networks and to increase their power transfer capability."

Based on the hundreds of millions of dollars allocated each year by utilities to solve voltage stability problems, the company estimates that the addressable worldwide market for its products and services is more than $500 million annually.

"American Superconductor's strategy to use its SMES technology in a distributed fashion in transmission networks is a powerful approach to solving the known problem of voltage instabilities," stated Paul Grant, science fellow at the Electric Power Research Institute. "D-SMES may also be a key to accelerating the broader implementation of distributed generation, which could potentially be a source of network stability problems."

Deregulation and Competition

Around the world, the electric utility industry is undergoing fundamental and unprecedented change. Competition in generation markets is increasing while siting restrictions and cost pressures on utilities are becoming more severe. Against these industry dynamics is the cold hard reality of increasing demand for electric power which, when infrastructure upgrades are cancelled or delayed, can result in transmission-level voltage stability problems. As existing power stations in critical grid locations face retirement for economic and environmental reasons, affected networks risk being weakened further.

While independent power producers are adding new generating capacity, their new power stations often do not take advantage of the existing transmission infrastructure, and may cause various stability problems. In the past, the commonly accepted solution was to add transmission lines and associated facilities, such as substations, to affected areas. Recently, however, right-of-way costs have escalated, and environmental opposition to new lines has made securing permits both costly and uncertain.

According to industry experts, deregulation of the electric utility industry will be better enabled and hastened by new power technologies that enhance the reliability of transmission and distribution networks. Adoption of these new power technologies will provide competitive utilities a means for meaningful differentiation in an open market. American Superconductor believes its product offerings based on SMES technology meet these requirements.

American Superconductor

American Superconductor Corporation, headquartered in Westborough, Mass., was founded in 1987 and is an industry leader in developing, manufacturing and marketing products utilizing superconducting materials for electric power applications. The company's products are designed to improve power quality and reliability, conserve electricity and reduce operating costs for electric utilities and their customers. Products are sold directly or integrated into the advanced electric power equipment of major suppliers to electric utilities and industrial users of power. For more information, please see www.amsuper.com.

Certain statements in this press release, including statements containing the words "believes," "anticipates," "plans," "expects" 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 the company's 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 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.
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Publication:Business Wire
Geographic Code:1U1MA
Date:Feb 11, 1999
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