Beacon Power’s Rebirth Enlivens Energy Storage Sector
Nearly two years ago, Beacon Power had the wind
knocked out of it. But it has emerged from
bankruptcy, all after the energy storage company had
won a loan guarantee provided by the Obama
administration. Now, on Friday, it will install its
first storage device at a pending Pennsylvania-based
project.
Balancing the electricity load is difficult. The
hard part is maintaining that portion of the system
that often sits idle but which is necessary to meet
high energy times.
Enter energy storage, where the electricity can be
housed during periods of less demand and then
subsequently set free when it is needed most. That,
in essence, contributes to a more efficient
production and delivery process while also adding to
the potential for alternative sources. Users can
power-up with a "battery" or other device instead of
directly from a congested grid or maxed-out power
plants.
Energy storage gives utilities, power marketers and
industrial customers the flexibility to respond to
power shortages, price spikes or brownouts.
Utilities, for instance, must precisely measure
their load generation with the demands of their end
users -- a difficult task given that energy usage
fluctuates, particularly at industrial sites that
routinely implement new processes. Without adequate
capacity, all wholesale buyers of electricity would
be subject to the whims of the market.
“The value in fast-response energy storage, or
flywheels, is that it is more efficient and more
cost effective than alternative technologies,” says
Barry Brits, chief executive of
Beacon Power, in a telephone interview.
“Flywheels perform very accurately and it is good
for grid systems: Our cycle life is many times
higher than alternative storage technologies. We are
charging up and putting the electricity back on the
grid, and doing that many times.”
Beacon, which restarted its manufacturing operations
in December 2012, is now building a 20-megawatt
“flywheel” facility that will sell its power into
the PJM Interconnection that manages the
transmission grid over 13 Mid-Atlantic states. Brits
explains that, initially, the unit will start up in
Hazle Township, Penn. and will be 4 megawatts. By
the second quarter of next year, it will be fully
operational, he says.
Material Role
Beacon Power has had successful projects in New York
State and in California. In 2010, it had gotten a
$40 million loan guarantee to expand a facility in
New York. And while it completed its 20-megawatt
deal there, it soon after went belly up. However,
the private equity firm, Rockland Capital, stepped
in and bought Beacon.
Rockland will repay 70 percent of the original $40
million federal loan guarantee, says Brits. And it
will do so from cash generated by the New York
project.
One of the reasons Beacon has remained a viable
entity is because the
Federal Energy Regulatory Commission approved a
mechanism to compensate resources provided by energy
storage owners, says Brits. That is, makers of
flywheel projects are able to quickly infuse energy
into the grid and they are to be paid accordingly.
Interestingly, that agency’s ruling came out the
same day that Beacon had filed for bankruptcy, in
October 2011.
“FERC had a very material role” in Beacon’s rebirth,
says Brits. “Our challenge in repaying the original
debt on our New York project had been that natural
gas prices were really low. But Rockland was able to
look at that asset and realize that with the FERC
ruling, the project could cover its costs and become
valuable.”
To be clear, storage devices come in many forms: The
most prevalent ones today are batteries that link to
the transmission grid where they siphon off power at
night, and store it. It is then dispatched during
the day when prices rise. Then there’s the
fast-response flywheels, and a deviation of that
called kinetic energy storage that is practical for
very short-term needs.
Beyond those tools, there’s also compressed air
energy storage that holds air underground and
releases it in heated form to create electricity.
And there’s the mature pumped hydro storage, whereby
turbines push water into reservoirs at night and
then let it go during the day when demand is
highest.
Energy storage, generally, is relatively expensive
and must still prove itself in the market. To
optimize both cost and performance, experts say that
devices must be able to offer other services.
Until then, the federal government will partner with
private industry to help foster this sector. That is
why the 2009 federal stimulus plan has provided $185
million to 16 energy storage demonstration projects.
Eventually, utilities may find energy storage to be
a more cost effective solution than system upgrades.
And while the overall objective of storage is to
optimize the electrical system, the focus is now on
using it to grow renewable energies that can be
variable in nature. If wind and solar are to reach
their potential then large-scale storage devices
must be developed and deployed.
“Our grid storage products are commercial because
they unlock value from existing customer assets,”
says Chris Shelton, president of
AES Energy Storage, in an interview with this
writer.
Increasing the network’s reliability and efficiency
would potentially eliminate the need for new
production. Wind and solar developers, meanwhile,
would get a little insurance when their resources
are not available. The technologies are coming and
Beacon’s rebound is an indication of that. But it
will be a gradual evolution that is highly dependent
on both cost and performance.
EnergyBiz Insider has been awarded the Gold for
Original Web Commentary presented by the American
Society of Business Press Editors. The column is
also the Winner of the 2011 Online Column category
awarded by Media Industry News, MIN. Ken Silverstein
has been honored as one of MIN’s Most Intriguing
People in Media.
Twitter: @Ken_Silverstein
energybizinsider@energycentral.com
Copyright © 1996-2013 by CyberTech, Inc. All rights reserved.
To subscribe or visit go to: http://www.energycentral.com
To subscribe or visit go to: http://www.energybiz.com
http://www.energybiz.com/article/13/06/beacon-power-s-rebirth-enlivens-energy-storage-sector