Beacon Power Corp. (NSDQ: BCON) has found a second customer — utility American Electric Power — interested in using its flywheel energy storage systems for so-called frequency regulation services. Beacon will build and operate a 1-megawatt facility for the utility's subsidiary Columbus Southern Power Company to help electricity grid operator PJM regulate the frequency of power over the transmission grid, the companies announced Monday. Like Beacon's existing project with ISO New England, flywheels will be used to keep grid electricity flowing at a constant 60 hertz, or cycles per second. Such frequency regulation takes up as much as 1 percent of all the power produced in North America, a need that's mostly met by fossil fuel-fired power plants responding to signals from grid operators. Thus, using flywheels instead could lead to big reductions in greenhouse-gas emissions, according toa December study that Beacon commissioned looking at the potential effects of a 20-megawatt flywheel-based frequency regulation system. Of course, Beacon hasn't built a 20-megawatt frequency regulation system yet. In fact, the Tyngsboro, Mass.-based company recently scaled back its first project with ISO New England from 5 megawatts to 3 megawatts (see Beacon Power Seeks to Raise $4.1M). The company now operates a 1-megawatt pilot project for the grid operator, and is seeking a loan guarantee from the U.S. Department of Energy to build a 20-megawatt frequency regulation plant in Stephentown, N.Y. Beacon has had a bit of a rough ride developing its flywheel technology, including a 2006 test malfunction that led to delays (see Beacon Picks Up Speed). In November it reported a third-quarter 2008 loss of $5.6 million on revenues of $4,000, compared to a loss of $2.8 million on revenues of $373,000 in the same quarter of 2007, but did start receiving its first revenues from ISO New England in the same month. The American Electric Power project is set to start construction in mid-2009.