Could Beacon Power of Tyngsboro have prospered?

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    Could Beacon Power of Tyngsboro have prospered?

    A recent bankruptcy by Beacon Power of Tyngsboro, MA, got much less notice this year than the collapse of Evergreen Solar in Devens, MA, and the widely publicized failure of Solyndra in California. Like Solyndra, Beacon Power received a federal loan guarantee, but its $39 million in federal and $3.5 million in state support were more in line with the $80 million that Evergreen garnered in grants, loans and other state aid.

    As with wind and solar power, the biggest hurdle in energy storage, Beacon Power's line of business, remains cost. How much does buffering a power source with an energy storage system add to cost of power delivered? Today, the best results are not coming from smaller, flywheel storage units like Beacon's but from larger, battery-backed units. In those market circumstances, could Beacon Power have prospered?

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    Energy storage competition

    Large energy storage systems are used for two main purposes, power stabilization and load shifting. A typical stabilization system may have a dozen or more charge-discharge cycles a day, responding to short-term changes in power demand and supply. A typical load-shifting system will have only one charge-discharge cycle per day, moving energy from a production period to a demand period. The traditional systems employ either pumped hydroelectric or compressed air storage, but both of those depend on relatively rare geological features.

    Grid stabilization puts a premium on long equipment lifetime, as measured in charge-discharge cycles. Load shifting puts a premium on high storage capacity. Both types of systems benefit from increased efficiency of energy transfer and lowered costs. Beacon Power's main commercial competitors are battery systems. There are four types with reasonably established track records, installing systems rated at 5 MWh or more through 2011. With their most active manufacturers and largest systems completed through 2011, they are:

    lead-acid-----------Exide-----40 MWh
    nickel-cadmium--Saft-------15 MWh
    sodium-sulfur-----NGK----238 MWh
    lithium-ion---------A123-----25 MWh

    Of these, sodium-sulfur from NGK is on the strongest growth path, with around 1,800 MWh installed world-wide. According to information found in financial newsletters, recent large orders to NGK were priced at about $0.65 per watt-hour, including power controls and installation.

    Beacon Power's position in this market was to offer faster response and higher efficiency but lower capacity and higher cost of energy storage. Its largest system provided 5 MWh of storage at a cost of about $7.80 per watt-hour. As compared with sodium-sulfur batteries, its response time is a fraction of a second, versus a few seconds, its rated life is about 125,000 cycles, versus about 5,000 cycles, and its rated AC efficiency is about 85 percent, versus about 75 percent.

    Technical advantages of the Beacon Power flywheel storage have not been enough to outweigh cost advantages of the NGK sodium-sulfur battery storage for most potential customers. In practice, the response speed of the NGK systems has been fast enough to stabilize outputs from wind and solar farms, although it might not be fast enough to cope with demand variations found in transit systems. Energy savings from higher efficiency have not usually been enough to offset higher costs of equipment.

    Earlier this year, Bloomberg Finance tried to estimate the financial values of energy storage systems for a variety of uses in the U.S. Only three types of use stood out: stabilization, valued at $1.15 per watt-hour, load shifting to avoid transmission upgrades, valued at $0.41 per watt-hour, and load-shifting to reduce electricity rates, valued at $0.38 per watt-hour. These are, in fact, the main uses so far in the U.S., but all of them so far for new-generation equipment are at pilot-project scale. [ Shu Sun, Grid-scale energy storage, Bloomberg New Energy Finance, April 4, 2011, at ]

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    Actuaries at work: values of energy storage

    While simple cases make it look as though sodium-sulfur battery systems have a useful role in stabilizing outputs of wind and solar farms but no competitors have any current business prospects, values of energy storage can be complex, requiring actuarial talent on the order of Medicare. [ Rahul Walawalkar and Jay Apt, Market analysis of emerging electric energy storage systems, National Energy Technology Laboratory, 2008, at ]

    Drs. Walawalkar and Apt show that flywheel energy storage can provide significant value for preventing energy losses from transmission imbalances, found more likely in regions remote from metropolitan areas. [Fig. 2-8a, p. 34] Beacon Power was surely well aware of those economic factors and sited its first large unit in Stephentown, NY, east of Albany near the Massachusetts border. It began full operations in July of this year. However, one of its flywheels disintegrated in an explosion and fire about two weeks later, partly disabling the facility. [ David Flint, Mishap at the Beacon Power frequency flywheel plant, Eastwick Press (NY), July 29, 2011, at ]

    Unfortunate timing might have hampered the next project, in Hazle Township, PA, for which permit reviews were underway. Over objections of the U.S. Energy Department, Beacon Power now has court authorization to apply collateral for its federal loan guarantee toward maintaining operations needed for the Pennsylvania project. [ Ron Bartizek, Beacon Power pursuing Hazle Township plant, Wilkes-Barre Times Leader (PA), November 5, 2011, at,0_ ] So it's not yet time to toll the bells for a plucky local company.

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    Energy storage for renewable power

    Alas, Beacon Power of Tyngsboro has decided to liquidate its assets rather than reorganize and try to continue its innovative energy storage business, leaving yet another gap in the U.S. energy market. [ Randall Chase, Associated Press, Bankrupt energy firm Beacon Power to sell assets, Boston Globe, November 18, 2011, at ]

    What kept Beacon Power mostly off reporters' radar screens was probably its business in energy storage, rather than in trendy renewable power generation. However, for renewable power to succeed, energy storage may be critical. The uncertain availability of solar and wind power and their rapid changes in outputs are among their major practical problems. Energy storage in some form may be needed to match variations in renewable power outputs to demands on power grids.

    Spain and Denmark have shown the limits of renewable power feeding into power grids. Spain's mix of solar and wind has been unable to get beyond about 8 percent of the average demand without instabilities that can lead to disconnects. With its somewhat less variable mix and with buffering from hydropower in Norway, Denmark has typically been able to supply about 12 percent of its domestic grid from wind farms. However, when available wind power rises higher, surplus power is usually being sent out-of-country at a loss, mostly to Germany. [ Nicolas Boccard, Capacity factor of wind power: realized values vs. estimates, Energy Policy 37:2679-2688, April 10, 2009, available at ]

    Most of the U.S. is nowhere near those limits, but large wind farms in Texas are now capable of supplying up to about 25 percent of the state's demands. On average, they currently generate about 8 percent, but on one occasion this year, they reached about 15 percent. Stability of the Texas grid is starting to get attention. As with wind power, so with energy storage (and contrary to its image as an oil state), Texas will likely continue to lead in renewable technologies for many years. [ Kate Galbraith, Share of wind on Texas' electric grid keeps rising, Texas Tribune (Austin, TX), January 10, 2011, at ]

    In Washington state, Bonneville Power Administration draws much of its power from hydroelectric dams built and maintained by the federal government. In recent years, private companies have installed hundreds of wind turbines nearby, in the Columbia River Gorge. When large storms reach the region, heavy water flows often coincide with high wind-power outputs: a potential oversupply of power. In June, 2010, a violent storm caused such a condition, and Bonneville responded by turning off all fossil-fuel plants and ordering an 80-percent cutback at the one nuclear power-plant. The grid was near emergency disconnects when the storm abated.

    Bonneville Power has begun a pilot program to install low-technology energy storage: remote-controlled water heaters and space heaters that can draw surplus electricity, store energy as low-temperature heat and blend it into household water and heating systems. That is likely to remain an unusual response to what may be a unique set of circumstances. [ Matthew L. Wald, Taming unruly wind-power, New York Times, November 5, 2011, at ]