Flywheel co Beacon Power sold

Wednesday, February 8, 2012

Flywheel-based energy storage developer Beacon Power Corp. may have a new lease on life, as private equity firm Rockland Capital proposes to buy the bankrupt company for $30.5 million.

Beacon Power patented a composite flywheel technology for use in balancing supply and demand on the nation's electric grid, an application known as frequency regulation.  Unless this balance is maintained in real-time, problems can arise ranging from poor power quality to blackouts and safety hazards.  Historically, grid operators controlled the output of electric generators to maintain this balance, but flywheels and other energy storage technologies may be able to smooth out disturbances on the grid more , more cost-effectively, and with fewer environmental impacts.

Beacon Power's business model has involved building, owning, and operating flywheel-based frequency regulation plants on a merchant basis.  Indeed, Beacon Power describes itself as "a global leader in the development and commercialization of flywheel-based energy storage solutions for grid-scale frequency regulation services and other utility-scale and unitary energy storage applications."

In August 2010, Beacon Power received a $43 million loan guarantee through the U.S. Department of Energy's loan program office.  That financing helped Beacon Power develop its 20 MW flywheel project in Stephentown, NY.  But in October 21, Beacon Power filed for Chapter 11 in federal bankruptcy court.

At about the same time, federal regulators changed the way grid operators pay for frequency regulation.  FERC Order No. 755 required grid operators to pay more for fast-responding frequency regulation -- just the kind of service that flywheel operators like Beacon Power may be able to provide best.

Now, Rockland Power proposes to pick up where Beacon left off, buying Beacon's assets for $5.5 million cash and a $25 million promissory note to the DOE.  Rockland says that it intends to continue operating the Stephentown plant and developing a second facility in Hazle Township, Pennsylvania.  Order 755 has given the energy storage industry a needed boost, which may be enough to let Rockland succeed with flywheel energy storage.

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