The DOE loan program had its obvious big losers (Solyndra), its seemingly big winners (Tesla), and firms like Beacon Power, which are still works in progress.

Beacon is a builder of flywheel-based energy storage for frequency regulation markets. The IEEE defines regulation as "a zero-energy service that compensates for minute-to-minute fluctuations in total system load and uncontrolled generation."

It's a market in which an energy storage service provider such as Beacon has an advantage because of the rapid response that flywheel technology can provide. Frequency regulation is known as an ancillary service and it's a market in which flywheel energy storage has a real monetization value.

In 2010, Beacon won a $43 million DOE loan guarantee.

The company declared bankruptcy in 2011.

In 2012, its assets, including a 20-megawatt energy storage plant in New York, were bought by private equity firm Rockland Capital for $30.5 million in cash, along with “additional guarantees and funding obligations to DOE of $6.6 million.”

Now Beacon Power LLC maintains the operations of Beacon’s 20-megawatt grid frequency regulation facility in Stephentown, NY, which has been delivering frequency regulation services since early 2011. Beacon is also developing a second 20-megawatt flywheel regulation plant in Pennsylvania.

Barry Brits, the CEO of the reborn Beacon Power, spoke at last week's Energy Storage Association meeting

He noted that the 20-megawatt Stephentown facility in New York "boasts 200 flywheels operating in parallel to provide 20 megawatts of up-regulation and 20 megawatts of down-regulation in immediate response to the ISO’s AGC [Automatic Generation Control] signal." The plant has been in commercial operation for two years and has provided more than 250,000 megawatt-hours of frequency regulation service.

Brits notes, "We have also seen a very high full charge/discharge cycle requirement on the resource to match the aggressive ramping requirement of the NYSIO. Approximately 4,000 full charge and discharge cycles were seen in the first year of operation. It is the flywheel’s low cost per cycle, performance and durability that provides the basis for strong project economics."

 

The 20-megawatt Hazle Township project in Pennsylvania is located in the PJM market. Construction started in December.

There are currently 120 foundations on site, interconnection is progressing and flywheel deliveries begin next month. Brits noted that the capex for this project has dropped by approximately $10 million compared to the Stephentown project, and the firm expects further cost reductions.

 

Both of the above resources are paid for by providing frequency regulation service to the relevant ISO. The Massachusetts facility also receives payment for Alternative Energy Credits. Beacon uses a "build, own, operate and transfer" business model.

Brits said that Beacon is expanding with "active project development in California, PJM, ISO-NE and Midwest ISO." He noted flywheel technology's "ramp rate, use of the full depth of discharge as often as needed, very high cycle life, and no-degradation through the long life of the asset."

The CEO said that the new projects are enabled by FERC order 755, a ruling from the Federal Energy Regulatory Commission (FERC) to substantially increase the value that Beacon’s flywheel plants can earn for their services. That ruling calls for the country’s interstate grid operators to institute market systems that pay more for “fast” responding sources like flywheels and batteries than for slow, fossil-fueled power. It's a pay-for-performance tariff.

Given a second chance at the market and helped out by FERC 755, Beacon is taking another run at commercializing flywheel technology and using fast energy storage to compete in frequency regulation markets. The firm was acquired by private equity investors Rockland Capital, which is in the business of "optimizing" companies with the expectations of yielding "competitive risk-adjusted returns."

Other flywheel energy storage companies include Active Power and Flywheel Energy Systems.

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