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Superconductor Fault Current Limiter Successfully Demonstrated for First Time in China Power Grid

Westborough, MA, Dec. 20: American Superconductor Corporation 
(NASDAQ:AMSC), a leading electricity solutions company, and China's Institute of Electrical Engineering (IEE) today announced that IEE has successfully demonstrated a superconductor-based fault current limiter -- essentially a high voltage surge protector -- for the first time in a power grid in China. The device was fabricated by IEE in collaboration with the Technical Institute of Physics and Chemistry and Hunan Electric Power Company utilizing "smart" high temperature superconductor (HTS) wire manufactured by AMSC. Since August 2005, IEE's fault current limiter device has successfully suppressed large spikes of current in the grid that were over five times the normal levels. Superconductor wires are considered smart because they possess unique physical properties that allow them to react instantaneously to current surges, passing electricity along at normal levels while also being able to recognize and then suppress large surges of electrical current. Suppressing spikes of electrical current is important because it prevents damage to expensive electrical equipment in power grids. Fault current limiters cannot be made from conventional materials such as copper wire.

According to Dr. Liye Xiao, Deputy Director of the IEE and Director of the Applied Superconductivity Laboratory at the Chinese Academy of Science, this project is an important step in demonstrating the value of these devices in greatly improving the reliability and stability of power grids in China. "Demand for electric power in China continues to grow dramatically year-over- year," said Dr. Xiao. "We need to utilize innovative devices, such as fault current limiters and superconductor transformers and power cables, to guarantee the reliability and stability of our power grids because electricity is the lifeblood of our rapidly growing economy."

"This demonstration project is a critical step on the path to commercial sales of superconductor fault current limiters in China -- a market that we believe will be very large," said Greg Yurek, chief executive of AMSC. The U.S. Department of Energy estimates that the market for superconductor fault current limiters in the U.S. alone will be several billion dollars over the next 15 years. "We expect the market in China to be even larger because grids there are already approaching the limits of circuit breakers in their rapidly expanding cities," said Yurek.

Technical Background

Fault current limiter devices utilize the unique property of superconductors to switch from a state of zero resistance to the flow of electrical current to a resistive state when the electrical current passing through a superconductor becomes too high. By switching from no resistance to a high resistance, a coil of superconductor wire placed in a power grid has the ability to sense and then suppress, or limit, electrical current spikes (technically known as "fault currents") that are caused by short circuits.

The fault current limiter developed by IEE is installed in an electrical substation near Changsha, the capital city of Hunan Province. It has a voltage rating of 10.5 kilovolts and its normal operating current is 400 Amperes (AC). Since it was put into operation in August 2005, it has instantaneously reduced three-phase, short circuit currents in the range of 3,500 Amperes down to 635 Amperes, thereby protecting expensive electrical equipment from the current spikes. It is expected to remain in operation for a total of six months, after which it will be removed from service to undergo internal examination of all of the components in order to learn how to make improvements for commercial systems. The device will then be improved if needed and returned to operation in the power grid.

The Market Need for Surge Protectors

The U.S. Department of Energy estimates that the potential market for superconductor-based fault current limiters over the next 15 years is several billion dollars in the U.S. alone. AMSC expects fault current limiters to be widely available commercially within three to five years. To learn more about fault current limiters please see http://www.amsuper.com/products/htsWire/FaultCurrentLimiters.cfm.

About China' Institute of Electrical Engineering (IEE)

IEE is a research institute of the Chinese Academy of Sciences (CAS). It focuses on R&D of high technologies for the safe and reliable operation of power grids and new sources of energy. It has conducted R&D for superconductor technologies for more than 40 years, and it has successfully fabricated high field superconductor magnets for a variety of applications including medical devices, material processing and industrial uses. Since 2000, it has successfully tested superconductor power devices such as transformers and superconducting magnetic energy storage (SMES) systems, and demonstrated an HTS power cable in a live distribution system. The Applied Superconductivity Laboratory, which is associated with IEE, is one of the key laboratories of the CAS. It has 35 scientists and engineers and 40 post-graduate students. For more information, please visit the website http://www.iee.ac.cn/english.htm.

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