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Flywheels: A Tech That's Just Spinning Its Wheels?

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beaconpower1The flywheel industry hit another bump in its long road to mainstream commercialization this week when Beacon Power Corp. (s BCON) said it would delay the expansion of its commercial project. The company, which uses spinning discs to help keep electricity flowing over the grid at the steady 60 hertz required by U.S. household appliances, previously expected to grow the project’s capacity from 1 megawatt – made up of a team of 10 flywheels in Tynsgsboro, Mass. – to 5 megawatts by the end of this year.

But with all the uncertainty and volatility in the stock market, the company announced Monday that it had decided to raise less cash this year, putting off some of the fund raising and capacity growth until the beginning of next year. Beacon said it now expects to reach 3 megawatts of capacity by the end of this year and 5 megawatts by the first quarter of 2009.

It’s the latest in a series of setbacks for the technology, making us wonder if flywheel companies are just spinning their wheels.

Beacon, for example, has previously suffered other delays, such as an unexpected technology malfunction in 2006. Also on Monday, Beacon said it had widened its third-quarter net loss to $5.6 million, or 6 cents per share, compared to a loss of $2.8 million, or 4 cents per share, in the year-ago quarter, as revenue fell to $4,000 from $373,000.

And the news came after Active Power Inc. (s ACPW), which makes flywheels for backup power, last month also posted growing losses. The company posted a third-quarter loss of $4.1 million, or 7 cents per share, up from a loss of $3.5 million, or 6 cents per share, from the third quarter of 2007, in spite of record revenue that grew 51 percent to $12.4 million.

Those difficulties don’t necessarily mean the technology is in trouble, according to John Quealy, a managing director with Canaccord Adams.

Like a number of other technologies, including demand response and energy efficiency, energy storage is suffering from weak power prices last summer and a crash in the economy, he said.

“Given the commodity softness and the real recessionary worries in the last two months, it’s no surprise folks are being more conservative with their project scopes,” he said. “But while the underlying commodity market has weakened a bit, the secular trend is still in tact.”

Quealy pointed to Wisconsin, which Tuesday rejected the expansion of a coal-fired power plant.

Also, another flywheel company, Pentadyne Power Corp., is actually doing well.

The company raised $22 million in September and earlier this month won a San Fernando Valley Business Journal award for the fastest-growing private company in the area, based on its average three-year revenue growth. The company, which, like Active Power, is making flywheels for backup power, grew an average of 1,533 percent from 2005 to 2007, according to the Journal.

Still, another analyst, Clean Edge principal Ron Pernick, said that Beacon can’t blame all of its troubles on the economy.

“Up until a few years ago, nobody was using flywheels in any real way, and it hasn’t reached scale yet,” he said. “The current situation can’t be blamed for all an organization’s issues – there are also other underlying reasons that an organization might be having difficulties in the marketplace.”

Flywheels have faced a number of challenges, including technology development, difficulty finding the right market and competition from batteries, which have received a good amount of funding, he said.

“Flywheels are still sort of in the science-project stage, although not completely,” he said. “We haven’t seen, perhaps, as promising a solution [in flywheels] as other technologies we’ve been tracking.”

Heather Daniell, lead analyst for energy efficiency and power storage at New Energy Finance, agreed.

“Flywheels don’t have either the foothold that batteries have or the large capacity for technology breakthroughs that ultracapacitors have,” she said.

10 Responses to “Flywheels: A Tech That's Just Spinning Its Wheels?”

  1. Todays Flywheels are like the earliest flying machines, plenty of room for improvement.
    Batteries and Capacitors have been around and undergoing constant improvment for hundreds of years.

  2. If a 10-20kw/hr compact flywheel is cost competitive with storage batteries on a kw/hr basis then there’s a ready potential market in small residential systems for storing off peak power for use during peak hours… and/or storing PV and wind renewables generated during the day for use in the evening.

    Just my $0.10 worth

  3. J.M. Saltzman

    I always thought massive (think: city block-sized) flywheels deep underground would be the ultimate in energy storage, as long as they’re engineered right. Maglev bearing ftw…? But then you might as well just go geothermal and be done with it.