Valence Technology Brings Intelligent Batteries to Smart Grid Community of the Future

Valence Technology (NASDAQ: VLNC) today announced it has been selected as the preferred residential/community battery technology provider for the “Smart Grid Community of the Future,” the first smart grid solar powered residential development in Texas, the Houston-area master planned community of Discovery at Spring Trails. Utilizing its lithium phosphate battery design, including intelligent Command & Control logic, Valence Technology will supply dynamic energy systems for the individual smart grid residences containing electric vehicle charging stations and smart appliances. Valence Technology’s energy solutions will be used to support a smart-energy practice known as “peak shaving,” whereby smart appliances like dishwashers and washing machines are efficiently utilized during peak demand hours.

This smart grid project will demonstrate how community battery systems can enhance grid stability and decrease overall electricity costs by practicing “peak shaving.” Homeowners can avoid higher peak power costs during evening hours when multiple appliances are typically running after Valence Technology dynamic energy systems kick-in to power the smart appliances.

“Valence Technology is proud to be involved with a project as pioneering as the Discovery at Spring Trails smart grid community,” said Robert L. Kanode, president and CEO, Valence Technology. “By significantly reducing homeowners' energy costs through peak shaving, community storage applications will gain acceptance in the marketplace. Valence Technology is well-positioned to provide proven, field-tested dynamic energy systems that will enable greener, smarter and more efficient energy use.”

As part of the regional demonstration project entitled “Technology Solutions for Wind Integration in the Electric Reliability Council of Texas (ERCOT),” the “Smart Grid Community of the Future” will serve as a test model for the development of future distributed energy-generation communities utilizing clean technologies. The project includes improved technologies to monitor the ERCOT electric grid and expanded smart portal capability to support demand response in the new development, Discovery at Spring Trails. With $13.5 million in funding from the U.S. Department of Energy, the $27.4 million project is scheduled to break ground this year.

The team for this “Smart Grid” project includes CCET, Valence Technology, Southwest Research Institute, Electric Power Group, EcoEdge, CenterPoint Energy, Oncor, American Electric Power, Sharyland Utilities, Land Tejas Developers, Montgomery County Municipal Utility District 119, Xtreme Power/Energy Xtreme, General Electric, GridPoint, Direct Energy, Drummond Group and Frontier Associates.

Valence Technology stationary energy storage systems are designed for use in frequency regulation, community energy storage, telecommunications back-up power, auxiliary power units and uninterruptible power supply projects around the globe.

About Valence Technology, Inc.

Valence Technology is an international leader in the development of safe, long-life lithium iron magnesium phosphate energy storage solutions and provides the enabling technology behind some of the world’s most innovative and environmentally friendly applications. Founded in 1989, Valence today offers a proven technology and manufacturing infrastructure that delivers ISO-certified products and processes that are protected by an extensive global patent portfolio. Headquartered in Austin, Texas, Valence Technology is strategically aligned by five business segments: Motive, Marine, Stationary, Industrial and Military. In addition to the corporate headquarters in Texas, Valence Technology has its Research & Development Center in Nevada, its Europe/Asia Pacific Sales office in Northern Ireland and global fulfillment centers in North America and Europe. Valence Technology is traded on the NASDAQ Capital Market under the ticker symbol VLNC. For more information, visit www.valence.com.

About CCET

The Center for the Commercialization of Electric Technologies (CCET) recently received the $13.5 million grant from U.S. Department of Energy aimed at better integrating the vast Texas wind energy resources into the state’s electric transmission, distribution and metering system. The project represents a multi-faceted synergistic approach to managing fluctuations in wind power in the large Electric Reliability Council of Texas (ERCOT) transmission grid through better system monitoring capabilities, enhanced operator visualization and improved load management. CCET is leading a coalition of Texas electricity market participants, including Valence Technology, in carrying out the demonstration project. For more information, visit www.electrictechnologycenter.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may vary substantially from these forward-looking statements as a result of a variety of factors. The risk factors that could affect actual results are discussed in our periodic reports filed with the Securities and Exchange Commission, including our Report on Form 10-K for the year ended March 31, 2009, and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.

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