Gray has spent the last six years at Velkess developing a new type of flywheel, which is traditionally an energy storage device that uses large spinning discs inside a vacuum. The rotation of the discs is stored as kinetic energy (or movement), and flywheels are used like batteries, usually as backup power for data centers. Research firm Lux Research estimated that flywheels and ultracapacitors could make up 10 percent of the datacenter backup power market market by 2016. Gray is excited about the possibilities of using his flywheels for enabling the addition of more clean power to the grid and combined with solar roofs.

Traditional flywheels, made by companies like Beacon Power, use rigid materials like steel, and are made with ultra precision engineering and manufacturing. That makes them pretty expensive. Velkess’ technology, in contrast, is made with fiber glass and is much more flexible, and thus much more low cost. “Think about it as a jet engine versus a cowboy lasso,” explained Gray in an interview recently.

Picture the material used for shower doors, or fishing rods or tennis rackets, but without an underlying matrix or frame. Velkess is using that type of material almost like a rope or flexible hoop, said Gray. While Gray didn’t share many specific numbers, he said by using this type of material, the Velkess flywheel could be cheaper than using lead acid batteries for backup power over ten years.

Gray is looking to raise $54,000 to help him build a large 750-pound prototype of the flywheel. To date he’s bootstrapped the company, but he says he needs those tens of thousands of dollars to buy the next level of magnets needed for the large model. He says he’s been working with contractors in San Jose on testing technologies, and has made 50 prototypes, but with these funds he’ll build the first close-to-scale prototype product.

Gray is excited about the possibility of crowdfunding as he says it gives entrepreneurs like him — that don’t come from a university, don’t have government backing and don’t go the venture capital route — an opportunity to raise money from a community. Backers of the Velkess flywheel can get incentives like a Velkess sweatshirt or a mini toy prototype.

Manufacturing flywheels at scale, like most capital intensive energy technologies, has proved to be difficult at times. Flywheel maker Beacon Power was awarded a Department of Energy loan guarantee but then later went bankrupt and was sold to a private equity firm. Financing for cleantech innovations have dried up significantly in recent years, with venture capitalists putting a third less funding into cleantech startups in 2012. Government funding will also likely be constrained in 2013.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Report: Cleantech’s Third-Quarter Growing Pains
• Flash analysis: the Fisker debacle and its implications on investing, innovation, and government incentives
• Building energy management systems: overview and forecast

Mobile is not an iterative step for the web, but a complete revolution. So instead of asking ourselves how we can adapt web-based stores to our smartphones, we should be asking how we can use unlimited access to information to help us when we are in actual stores. The full potential of the mobile revolution won’t be realized until we build the tools that make every moment of our lives better.

The internet squeezed onto mobile devices

It’s understandable that we use the web as the baseline for measuring mobile, especially since many of our most widely used apps and services originated online – email, text, maps, Twitter, Facebook, Amazon and so on. The comparison has worked until now because we’ve spent our first years with smartphones reformatting the desktop experience of the web to fit into our pockets.

Today the web itself  is the product of decades of adapting the real world onto the connected desktop. First we ported over letters (email) and posters (websites). Then we moved what we could of traditional businesses online to the large screen perched on our desks: Bookstores and record stores became (literally) Amazon.com and iTunes; travel agents became Kayak.com and Yelp.com.

Since smartphones have brought computing power and an internet connection to our pockets, naturally we want those tools everywhere we go. But porting these advancements to our phones is only a pre-game to the real mobile revolution: when connectivity reshapes our minute-by-minute lives.

The offline opportunity

Opportunity is everywhere: The offline world is filled with friction, inefficiency, incomplete information, tedium and excess capacity. We feel it all the time. Waiting for elevators. Waiting for delivery drivers. Going across town only to find an empty bar. Forgetting the name of the person you just met.

These problems are so frequent and inherently human we are often blind to them. But for almost every problem we encounter, relief will be found in the same place: The device we carry with us. We don’t need to log in. Sensors minimize the information input. Smart assistants and voice recognition allow hand’s-free use and allow the least technically capable among us to use their deepest, richest features.

Last year saw the first mass implementations of phones making what used to be our offline lives better with companies like Uber and HotelTonight, but 2013 will be the year in which we start looking to our devices to scratch our every itch – for companionship, entertainment and much more.

Why now?

A number of these ideas have been around for a long time, but 2013 will be our first chance to build many of these new companies.

When Amazon.com started in 1994, less than 10 percent of U.S. adults were online. But even though that small segment of the population was spread around the country, everyone used the product in the same way whether the user was in Dubuque, Detroit or Dallas. Everyone hit the same website, bought the same things and was plugged into the same distribution network. In its infancy, Amazon only needed a tiny fraction of the country to use its services.

The comparison today with Uber, the real-time limo service, almost makes itself. Uber instantly pairs available drivers and cars with demand for rides. Crucially, Uber needs a critical mass of both supply and demand on its platform in the same geographical area, down to the same neighborhoods and streets, and needs to be able to update and match them in real time based on their current locations – a task nearly impossible to accomplish at scale on desktops or laptops. There are several forces beyond raw adoption numbers though that enable Uber’s success:

• Smartphones free us from our desks. When we have problems, questions or desires, we don’t need to return to our homes or offices to satiate them; we can address them on the spot.
• Touchscreens, Android and iOS are amazingly simple to use. Not only do people have the technology readily available to them, but even the least technically savvy can (and do) use it.
• Apps are simple, elegant problem solvers. Small, beautiful, and easy-to-use, the best apps are easily understood in seconds.

This is the year these trends will reach critical mass in almost every major market in the US. The result will be that more great companies will be started, gain meaningful traction and drive investment. More startups will get more tries at solving problems, and a virtuous cycle will accelerate the trends.

Bringing the offline world online poses unique hurdles and rewards

While some problems are easy to identify they may be difficult to solve. Unlike many of the first internet companies, the real world has legacy industries with entrenched lobbies, distribution providers or regulations. Many require real infrastructure that needs to be acquired, integrated with or leased. In the offline world, scale is often much harder than simply spinning up additional servers.

On the other hand, many of these new companies will become natural monopolies – difficult to overthrow once they achieve scale, lock up resources within their systems and start generating significant cash. Many are adaptations or improvements of current businesses, but given the inability of incumbents to design, develop and deploy revolutionary software, we can expect many to be upset by startups.

Looking to the future

Unlike any technology we have ever seen, mobile has the opportunity to improve our minute-by-minute lives, wherever we are. While there are unique perils to the offline world, the significant rewards to those that build these new companies more than offset the risk.

Companies like Uber and HotelTonight are just the tip of the iceberg. Square isn’t just revolutionizing payments, but the experience of paying for things in real life. A company like Highlight will eventually be a real-time, in-person LinkedIn that gives us context, history and information for all of our encounters.

Mobile isn’t a portal to the internet we know today, but a gateway to build world-changing companies that will upend entrenched incumbents and exponentially recast even the most bullish of mobile expectations.

Edward Aten is a designer and entrepreneur. He is the founder and CEO of CopThis and previously founded Swift.fm. Follow him on Twitter at @aten.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The future of mobile: a segment analysis by GigaOM Pro
• Frenemy mine: The pros and cons of social partnerships for online media companies
• Social first-quarter 2013: analysis and outlook

CEO Steve Humphreys said the company is changing the name because Cabulous is very “very taxi-centric” and very English-specific. Given that the company wants to address the transportation concerns of different types of people with a variety of options, including black cars and eventually international taxis, the company is looking for a more all-encompassing name.

“We want to be your practical get-around-town solution,” he said in an interview. “We didn’t want it to be a super serious name. We wanted the brand to be kind of fun.”

The company just raised an $8 million funding round in June led by RockPort Capital and Shasta Ventures, making the re-name timing slightly odd, but it’s also easy to understand how they’d want a new direction as the ride-sharing and collaborative consumption model has changed so quickly even in just the past few months. Since June, Lyft launched its public product for on-demand rides, Uber added taxis and hybrid cards to its lineup, and even the car-sharing market got more crowded.

It seems that for Cabulous, providing taxis alone isn’t enough, and it will take a foray into new territory — as well a new name — to keep up with the competition.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• 12 tech leaders’ resolutions for 2012
• Mobility on Demand Takes Aim at Transport Networks’ “Last Mile”
• Survey: How apps can solve photo management

EPRI pegs this year and 2012 as turning points for the grid energy storage market, because by then, companies that have collectively received more than $250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S. The Department of Energy has provided loans and grants to a multitude of storage tech developers and utilities for R&D and pilot projects (including this list of tech developers receiving ARPA-E grants). Utilities and storage service providers that have received federal dollars include Duke Energy , Pacific Gas and Electric and AES Energy Storage .

Since EPRI serves the power industry, the report aims to help power wholesalers and retailers figure out how to pick and choose – and potentially make solid money from – energy storage systems. Here are key facts and figures from the report:

1. Pumping Water Is Tried and True. Growth in grid energy storage is being pushed by the addition of clean power to the grid. Pumping water to a reservoir to release later to run generators, or pumped hydro, is an old approach and now makes up the biggest slice of the market. Over 127,000 MW of the global energy storage market, or a whopping 99 percent of it, belongs to pumped hydro.

Compressed air is also not so new, and follows far behind pumped hydro with 440 MW. Sodium-sulfur batteries make up a third of the overall installed grid energy storage market at 316 MW, followed by lead acid batteries (35 MW) and nickel cadmium batteries (27 MW). Flywheels, which are spinning discs, take in less than 25 MW, then lithium-ion batteries (which are still expensive) follow with 20 MW. At the bottom of the list are redox-flow batteries with less than 3MW.

2. Overall Too Expensive. The price for energy storage today, in general, is too high for widespread adoption. EPRI looks at the intersection of price point and energy storage applications to figure out the potential size of the market, in which utilities, grid operators and consumers have different perspectives on what are the right price points for them. Some energy storage applications can command higher prices, because they are in higher demand, such as making sure the grid runs at a particular frequency.

If the overall price for storage falls to around $700-$750 per kilowatt-hour, then the U.S. market could reach around 14 GW of capacity, says EPRI. The market will more than double that if the price falls below $500 per kilowatt-hour. Energy storage systems are measured in their discharge capacity (MW) and storage capacity (MWh).

3. Costs Vary Greatly: The cost of installing various types of storage systems depend on their size, duration of storage, efficiencies and how they are used. When looking at megawatt-scale storage systems to support hours of storage, the cheapest option is by compressing and storing electricity underground. Compressed air technologies cost between $960-1250 per kilowatt, or $60-125 per kilowatt-hour. In some scenarios, advanced lead acid battery system can be the most expensive, at $4600-$4900 per kilowatt or $920-980 per kilowatt-hour.

For frequency regulation by grid operators, who will want short bursts of energy and therefore a storage time measured in minutes, the least expensive choice is lead acid batteries, which cost $950-$1,590 per kilowatt, or $2,770-$3,800 per kilowatt-hour. Lithium-ion batteries follow with $1,085-$1,550 per kilowatt, or $4,340-$6,200 per kilowatt-hour. Flywheels are the most expensive, at $1,950-$2,200 per kilowatt or $7,800-$8,800 per kilowatt hour.

Lithium-ion batteries are among the most expensive choice for utilities that want storage to help them manage the grid and for industrial/commercial applications.

4. Where Are the Revenues? Power producers and retailers are more likely to invest in storage if they can generate revenues from doing so. What will really entice them is if one storage investment can provide multiple benefits and streams of revenues, EPRI said. The growing amount of wind energy is one promising market. Wind energy production tends to peak at night, and that further depresses electricity pricing in what’s already a low-rate period (off-peak) in some markets. Storing wind energy for use during peak demand would relieve that pricing pressure and provide revenue for power producers.

The growth in other renewable energy generation, such as solar, also offers potentially lucrative opportunities. But EPRI cautions that those opportunities are difficult to quantify for now, particularly for non-centralized solar energy systems that are popping up mostly on rooftops. And the growing use of smart meters and electric cars will likely prompt utilities to turn to storage to balance supply and demand.

5. The Cost of Energy Systems Over Time. Upfront installation cost isn’t the only metric used to figure out if an investment in energy storage is worthwhile. As with any energy delivery systems, utilities look at the levelized cost of energy – the cost of installing and operating a system over its expected lifetime. EPRI looks at levelized cost for utilities to manage renewable energy generation and their own grid’s supply and demand, and the results show that pumped hydro and below-ground compressed air are the lowest, under 20 cents per kilowatt-hour. Zinc-bromine and zinc-air batteries, around 20-30 cents per kilowatt-hour. Lead acid batteries, on the other hand, cost more. Depending on the types of lead-acid, the range swings from around 40 cents per kilowatt-hour to around $1 per kilowatt hour.

Photo courtesy of AES Energy Storage

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How energy data will impact the smart grid
• Opportunities for the future of batteries
• Green IT Q1: Cleantech Breaking Out — and Bracing for Hard Times

California’s renewable portfolio standard, which says that 20 percent of a utility’s electricity needs have to come from renewables by 2010, will lead to a cumulative capacity of 2,246 megawatts for solar and 6,688 megawatts for wind in the state by 2012 (the 2010 deadline comes with a grace period for utilities). But Cal ISO expects that with the addition of all that solar and wind, conventional, natural-gas power plants will be turned on and off more often, by 35 percent, to make up for any excess or shortfall of power from the variable nature of wind and solar.

Cal ISO found that there are a variety of things it needs to do to make sure the addition of wind and solar to the grid goes smoothly, including pursuing incentives and rules to attract and curtail the amount of renewable energy being fed to the grid, and turning to more cutting-edge weather forecasting tools to estimate in advance the likely output from wind and solar farms.

But one of the most important moves over the long run will be to make sure that policies around energy storage will enable the economical integration of novel storage technologies on the grid. The report doesn’t go into details about this missing piece, but the fact is the Cal ISO has already been lobbying the Federal Energy Regulatory Commission (FERC) on how to classify new storage technologies that could help grid operators manage the supply and demand of the grid. Cal ISO wants FERC to treat most storage systems as a form of energy generation rather than transmission, a distinction that affects how storage system owners get paid and, by extension, which emerging technologies could find warmer reception in the near term.

Cal ISO contends that storage can safe-keep the power for long hours but also inject it into the grid at a short notice, so it should be considered a generation asset that gets wholesale market prices, said Gregg Fishman, a spokesman for CalISO. If it’s counted as a transmission asset, then its owner can get a guaranteed recovery of the investment from rate payers.

Cal ISO already treats pumped hydro, a conventional technology, as generation, Fishman said. A pumped hydro operation uses excess electricity to move water uphill to a reservoir and let it run downstream to turbine generators when electricity rates are higher.

Similar discussions about how to regulate storage are happening throughout other parts of the country. New York ISO, for example, has gotten approval from FERC to set rules that say electricity from batteries and fly wheels can fetch market prices set specifically for power that is used to balance the grid. Beacon Power has gotten a federal loan guarantee for $43 million to build a 20-megawatt flywheel energy storage operation in New York. AES Energy has snagged $17.1 million in federal loan guarantees to build a 20-megawatt storage plant in New York using A123Systems’ lithium-ion batteries.

While regulators figure out how to marry storage technologies with the grid, companies such as SunPower and SolarCity are looking at packaging storage systems with solar electric systems for businesses and homes. Both have gotten grants from California to figure out the costs and benefits of adding storage.

SunPower has gotten nearly $1.86 million to see how batteries and ice energy can be a good fit for solar energy systems it sells to commercial customers, who have to deal with a more complex rate structure. “For net metering, residential rates tend to be simpler than commercial rates,” said Julie Blunden, executive vice president of public policy and corporate communications. “You might arrange your solar and storage to maximize of your net metering.”

SolarCity, meanwhile, is looking into the possibly of adding storage to its offering in the future. The installer has gotten $1.77 million from California to see if lithium-ion batteries are a good fit for residential solar electric systems and teamed up with with Tesla Motors, which will provide the batteries for six, yet disclosed, test sites.

For more research on cleantech financing check out GigaOM Pro (subscription required):

Cleantech Financing  Trends 2010 & Beyond

The storage market has been growing steadily over the years, averaging 10.9 percent annually: from $3.2 billion in 2006 to over $4.8 billion in 2010, the SBI said. The U.S. market has seen a 14.4 percent boost per year to reach $0.6 billion during the same period, and its growth is expected to accelerate to a 26.6 percent increase per year to nearly $2 billion in 2015.

It’s not surprising to see a forecast of strong growth in the U.S. market. After all, utilities in many states have mandates to sell renewable electricity, but most are in the early stages of meeting their goals and are still evaluating their needs to invest in new storage (pumped hydro, for example, has been around in the U.S. since 1929). The emergence of smart grid will also require utilities to be more nimble in managing their demand and supply.

Even in California, which has a tougher renewable energy requirement, utilities have only recently stepped up efforts to carry out storage projects. Pacific Gas and Electric has won about $25 million from the federal government to do a feasibility study on a 300-megawatt compressed air storage project in Kern County. In January, the California Public Utilities Commission approved PG&Es request to match the federal funding and use it for the project’s phase 1 (permitting, transmission interconnection and plant design). The utility was working on the final contract with the U.S. Department of Energy when I asked about it last week.

Compressed air storage involves using an underground reservoir to store the compressed air (pumped into storage when extra energy is produced, mostly in non-peak hours) before releasing it to produce electricity during peak hours. PG&E has estimated the project would take five years to design and build.

Interestingly, PG&E isn’t just looking at new types of storage technologies to meet its needs. Last Friday, PG&E filed an application with the CPUC to study the feasibility of building a 400-megawatt to 1,200-megawatt pumped hydro storage system –which would pump water to a reservoir at a higher elevation so it could be released to generate electricity as needed — on the Mokelumne River in eastern California. The utility said the project is necessary to help it manage its growing hoard of solar and wind power.

“The wind can blow strongly for hours, only to die out for days at a time. Solar modules can gush electrons in full sun, and then go dormant when clouds pass overhead. Since customers don’t want their lights to flicker on and off as the weather changes, today’s utilities — lacking much of any stored energy to call upon — must ramp generators powered by fossil fuels up and down as needed to keep supply in balance with demand,” according to the PG&E’s blog.

PG&E, along with Southern California Edison and other utilities across the country, is also looking at various battery chemistries, flywheels and other types of storage technologies. The federal government has been playing the banker to fund projectsto investigate a variety of storage technologies. Edison won $8 million of federal stimulus money to do an 8-megawatt lithium-ion battery project, for example. Beacon Power recently scored a federal loan guarantee to borrow $43 million for a 20-megawatt flywheel project in New York.

California could become a hot market for energy storage technologies if state legislators pass a bill, AB2514, that could lead to storage procurement mandates for its investor-owned utilities.

Earlier this year, IDC predicted that over 50 megawatts of lithium-ion batteries for utility energy storage will be shipped this year.

For more research on solar trends check out GigaOM Pro (subscription required):

The Real Reason Google Is Buying Wind Power

The Obama administration also announced a $16 million guarantee today for Nordic Windpower to build an assembly plant for its two-blade 1 MW wind turbine, bringing the number of awards under a much-delayed DOE program to three in the last four months (Energy Secretary Steven Chu made it a priority to accelerate the program when he entered office). In late March, cylindrical solar panel maker Solyndra snagged the first guarantee — for a whopping $535 million — to finance a new factory, three years after it applied for the funds and four years after Congress created the program. While Beacon’s guarantee is small relative to the one offered to Solyndra, it could help boost momentum for flywheel tech as well as the company, which has scored a few key deals in recent months after a rocky end to 2008.

Based in Tyngsboro, Mass., Beacon uses large spinning discs contained in a vacuum to keep electricity flowing over the power grid at a steady frequency — basically helping to stabilize the grid and allowing it to run more efficiently. Flywheels, which need little maintenance over their 20-year-plus life span and don’t have some of the toxic chemicals found in many batteries, are sometimes used as backup power for emergency power systems — what’s called uninterrupted power supply, or UPS (as explained in our smart grid energy storage FAQ).

Beacon had planned to raise capital and add 4 MW of capacity to a project in Tyngsboro by the end of last year, but announced in November that it would delay fund raising and slow down the expansion “in response to uncertainty and volatility in the equity markets.” But by February, Beacon landed a $3 million contract with U.S. Naval Sea Systems Command to look at flywheels for shipboard applications, and just a few weeks ago it scored a $2 million contract with a New York state utility operator to get started on the 20 MW Stephentown project that today’s loan guarantee will help it complete (providing some 62.5 percent of total financing for the estimated $69 million buildout).

According to a release from the DOE this morning, the Stephentown energy storage plant will absorb and discharge energy to the electric grid, making it possible to use more variable renewable energy sources (solar and wind power aren’t always available, and the current electric grid lacks storage capacity). Beacon President and CEO Bill Capp notes in the company’s announcement this morning that completion of the new plant will represent “a major transition” for Beacon’s flywheel tech –  from development and pilot operation to commercial scale — adding, “For New York initially, and later other regions where plants could be built, it will also signal a dramatic shift to a cleaner, more sustainable method of providing frequency regulation on the grid.”

As we’ve written before, energy storage represents a pivotal component of the smart grid, but until recently it has largely played second fiddle to digital intelligence for the power grid in the eyes of Congress, investors, utilities and entrepreneurs. With one of the first three guarantees from the DOE, it’s getting attention that’s long overdue.

Frequency regulation graphics credit Beacon Power

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How energy data will impact the smart grid
• Cleantech first-quarter 2013 analysis and outlook
• The fourth quarter of 2012 in cleantech

Top Energy Storage Options: Utilities, investors and policymakers face a complicated task in trying tp pick the right energy storage technologies for funding. Some of the top players? Pumped hydro, compressed air, flywheel energy, superconducting magnetic energy and thermal energy storage, plus advanced material and flow batteries. — ClimateIntel

Going Niche: Vestas’ move to start building custom turbines for the Chinese market may seem to go against the benefits of economies of scale, but it could be the only way to hang onto its precarious share of a market increasingly dominated by state-supported local players. — WSJ’s Environmental Capital

Canadian Economy Needs Cap and Trade: The most immediate threat Canada faces from greenhouse gas emissions is not environmental, but economic, according to a new report from the National Round Table on the Environment and the Economy. — NYT’s Green Inc.

U.S.-Mexico Climate Agreement: President Barack Obama and Mexican President Felipe Calderon agreed yesterday on a new partnership to fight climate change and promote clean energy. The two countries plan to broaden political and technical cooperation through the new Bilateral Framework on Clean Energy and Climate Change. — Reuters

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How energy data will impact the smart grid
• Locating data centers in an energy-constrained world
• Cleantech and investment in 2013

Last November, the company reined in plans on its first commercial project, blaming market volatility, and lowered its capacity target to 3 megawatts (MW) by the end of 2008, down from 5 MW. But that project, currently at 1 MW and operating out of Tyngsboro under ISO New England‘s Alternative Technologies Regulation Pilot Program, was dealt another blow by severe winter weather, which pushed back that new target to the end of the first quarter of this year.

The company still plans to hit 5 MW by the end of this year, but those extra megawatts of capacity — originally expected to be added onto the ISO New England project — will come from a development in Stephentown, N.Y., and a second site to be set up with either PJM Interconnection or Midwest ISO.

After getting hit with turbulent markets and snowstorms, will Beacon be able to weather the stormy seas of a Naval ship? The company said the power systems of Navy ships are basically mini-grids, supporting advanced launch systems, weapons, sensor systems, and other shipboard functions, and that it can use its experience with land-based grids on the project.

Under the Navy contract, Beacon said it will analyze future shipboard energy storage needs and identify applications that could work best with flywheel technology. The company said the initial research and development work is estimated at $900,000, with $500,000 of that already appropriated.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: the Fisker debacle and its implications on investing, innovation, and government incentives
• Building energy management systems: overview and forecast
• Cleantech first-quarter 2013 analysis and outlook