System Designed to Showcase Lithium Ion Battery Energy Storage as a Fast, Accurate and Clean Resource for Facilitating the Increased Integration of Renewable Energy Generation onto China's Power Grid

WALTHAM, Mass., July 20, 2012 -- A123 Systems

(Nasdaq:AONE), a developer and manufacturer of advanced
Nanophosphate(R) lithium iron phosphate batteries and systems, today
announced that it will supply a 2MW grid energy storage system to Ray Power
Systems Co. Ltd., a Chinese company focused on developing the frequency
regulation market and relevant technologies.

"The project in China will be designed to validate the technical
capabilities and benefits of energy storage as a fast-ramping, accurate and
clean resource for providing frequency regulation services," said Eldon Mou,
CEO of Ray Power. "Limited overall system ramping capability has created
renewable integration issues as well as potential risk of grid instability
because of the high penetration of renewable generation, particularly in
northern China. A123 Systems has demonstrated the viability and reliability
of its product through a number of successful global commercial deployments,
and we expect this project to showcase energy storage as a valuable resource
for meeting China's growing frequency regulation demand."

"We believe that China represents a large market opportunity for our energy
storage technology, including as a solution to address the ramp-management
challenges associated with the increased deployment of wind and other
renewable energy generation assets," said Robert Johnson, vice president of
the Energy Solutions Group at A123. "Today's announcement builds on our
progress in China and is a significant step toward proving the capability of
our technology for providing frequency regulation in China. Ray Power has a
deep understanding of China's power market and of energy storage
technologies and has developed a set of comprehensive solutions for
deploying energy storage to capitalize on this growing opportunity, so we
look forward to success in this initial deployment and believe it could lead
to additional projects going forward."

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of
advanced lithium-ion batteries and energy storage systems for
transportation, electric grid and commercial applications.
The company's proprietary Nanophosphate(R) lithium iron phosphate technology
is built on novel nanoscale materials initially developed at the
Massachusetts Institute of Technology and is designed to deliver high power
and energy density, increased safety and extended life. A123 leverages
breakthrough technology, high-quality manufacturing and expert systems
integration capabilities to deliver innovative solutions that enable
customers to bring next-generation products to market. For additional
information, please visit www.a123systems.com.