Despite Beacon’s Failure, Energy Storage Is Key

By Amy Sinatra Ayres & Marianne Lavelle, National Geographic Society

Don’t give up on energy storage technology just because one company failed; that was the message from energy experts, the power industry and the U.S. government in the wake of the bankruptcy of U.S.-backed Beacon Power.

The failure of the Tyngsboro, Massachusetts-based company is making headlines because it is the second firm to collapse after receiving millions of dollars in support from the U.S. government’s green energy loan guarantee program. Beacon received some $43 million in support ($39.1 million from the federal government, $4.6 million from the state of Massachusetts.)

image via Beacon Power

Just two months after the bankruptcy of Solyndra, the California solar panel manufacturer that had received $535 million in U.S. loan guarantees, Beacon’s woes extend the string of bad publicity for the program that was meant to jump-start U.S. clean energy innovation.

(Related: “Solar Industry ‘Darwinism’ Weeding Out Weaker Companies“)

But defenders of energy storage rushed to emphasize the importance of developing technology to hold power in reserve and deliver it to the grid when needed. In the U.S. Department of Energy’s blog, public affairs director Dan Leisitkow noted that technology like Beacon’s is designed to address the blackouts and other power disruptions cost Americans $150 billion annually (a timely argument after a weekend snowstorm delivered some of the most widespread power outages ever seen in some Northeastern states.)

The Electricity Storage Association (ESA), which represents not only Beacon but dozens of companies in the advanced battery, renewable energy and power delivery industries, put out a press release affirming the importance and viability of the technology. “As we add electric vehicles, renewable energy, and other systems that affect the dynamics of our electric grid, we will need the flexibility, reliability, efficiency and security that energy storage solutions provide,” the ESA said.

(Related: “Frozen Fish Help Reel In Germany’s Wind Power“)

The ESA said a ruling just last week by the U.S. Federal Energy Regulatory Commission, allowing incentives payments from grid operators to reliability companies, would help ensure that storage services are better compensated, “and should help these companies become more profitable.”

According to James Kirtley, a professor of electrical engineering at the Massachusetts Institute of Technology who helped in the start-up of Beacon Power, the question of compensation is crucial.

“One of the things Beacon was running into was finding out what they could charge for the ancillary services,” Kirtley said. Even the bidding companies didn’t know what the services were worth, he said. “It’s very hard to quantify.”

Kirtley does not believe that Beacon’s fall bodes ill for the energy storage industry.

“The reason [Beacon] went under was not because this was not an appropriate business for them to be in,” he said. “It was because they were underfunded” and operating “on a shoestring.”

Beacon’s loan guarantee had helped it build a plant using flywheel technology in Stephentown, New York.

The flywheel uses basic laws of physics to create energy and store it for when it’s needed. One big advantage is that it’s a “fast storage” technology, which can respond to a signal from an electrical grid in just four seconds.

(Related: “Upgrading the Electric Grid With Flywheels and Air“)

“This plant itself, which is operational and generating revenue, is a valuable collateral asset,” an Energy Department spokesman said in email on Sunday, reported Bloomberg.

Beacon Power’s bankruptcy comes just as the energy storage business was celebrating a major success. Only days before Beacon’s failure, AES Energy Storage, started commercial operation of the largest grid storage project of its kind, a 32-megawatt advanced battery system that is helping regulate power output from a new wind energy farm in West Virginia. (A subsidiary of the profitable global energy company, AES, AES Energy Storage also is a U.S. loan guarantee recipient; it received $17.1 million in backing for a project underway in New York.)

(Related: “Texas Pioneers Energy Storage in Giant Battery“)

But it also comes amid more bad news for the clean energy loan guarantee program. The White House announced it would conduct a 60-day review of all the decisions made in the program. And The New York Times reported that a $79 million loan guarantee recipient, Nevada Geothermal Power, is also in financial turmoil.

(Related from National Geographic magazine, “The Grid: Can We Fix the Infrastructure That Powers Our Lives?“)

Editor’s Note: This column comes to us as a cross post courtesy of National Geographic Society’s Great Energy Challenge blog. Author credit for the column goes to Amy Sinatra Ayres & Marianne Lavelle.

I am the editor-in-chief and founder for EarthTechling. This site is my desire to bring the world of green technology to consumers in a timely and informative matter. Prior to this my previous ventures have included a strong freelance writing career and time spent at Silicon Valley start ups.