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.

    Alas, Beacon Power 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 http://www.boston.com/business/articles/2011/11/18/bankrupt_energy_firm_beacon_power_to_sell_assets/ ]

    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.

     
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    Beacon Power's plans exploded

    Beacon Power designed flywheel energy storage for stabilization of regional power grids, currently achieved mainly by rapidly dispatchable "spinning reserves" such as gas turbine generators. The economic case for Beacon Power, as compared with other approaches to grid stabilization, was lower energy cost per unit of stabilization capacity and an ability to provide fast response to power transients.

    Beacon Power completed a plant at Stephentown, NY, east of Albany--so far the largest flywheel energy storage plant operating in the U.S. It entered full service in July, 2011. It is rated at 20 MW power input or output and 5 MWh energy storage. The full cost of the plant was disclosed as $69 million, to be recovered by selling services to the power grid. [ Energy Matters, Flywheel system under construction, August 11, 2010, at http://www.energymatters.com.au/index.php?main_page=news_article&article_id=991 ]

    Beacon Power rated units for at least 15 years of incident-free operation. However, two of the 200 flywheels at the Stephentown plant were lost to explosions in the first three months of operation, the first on July 27 and the second on October 13. [ Beacon Power's catastrophic flywheel failures, Energy Storage, October 26, 2011, at http://www.energystorageblog.com/2011/10/26/beacon_powers_catastrophic_flywheel_failures/ ] Other, similar plants were planned in Glenville, NY, and Hazle Township, PA, but now they likely will never be built.

     
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    Beacon Power gets 15 minutes in the New England sun

    Erin Ailworth wrote up Beacon Power for the business pages of the Globe on November 27. [ As federal funds dry up, Beacon Power still has reason for hope, at
    http://www.boston.com/business/technology/articles/2011/11/27/as_federal_funds_dry_up_beacon_power_still_has_reason_for_hope/ ]

    That story explores Beacon Power's development and tends to confirm the company's technology as a significant asset. Otherwise, lacking skilled and diligent reporters, the Globe relies, as usual, on politics to build a backbone for a story. Since politics plays only a passing role with Beacon Power, Ms. Ailworth's article soon turns flat and lapses into a tedious "he said, she said" drone.

    In her one venture into technical content, Ms. Ailworth claims Beacon Power is "saving [energy]...[from] wind turbines and solar panels for later use." Here she confuses differences between markets for energy storage using flywheels versus using batteries, failing to understand that Beacon Power is focused on power-grid stabilization over seconds and minutes, not on long-term energy arbitrage over hours.

    Missing from her story were useful descriptions of Beacon Power's technology, business potential, technical alternatives and competitors. Any of those topics would have taken Ms. Ailworth well outside Metro Boston, so they would simply be off-limits to a closeted Globe reporter. She was probably already stretching the news budget, with one long-distance phone call to the Department of Energy in Washington, DC.

    Ms. Ailworth, who has yet to demonstrate facility with financial issues, also ignored a particularly salient ingredient of Beacon Power's story: whether its business model remains viable. In 2008 the company started an approach of building power facilities and selling their services rather than building power equipment and selling it to developers of facilities.

    The strategy has parallels in renewable energy, notably the deep involvement of First Solar in Arizona with solar power farms that use its products: Desert Sunlight and Antelope Valley. That strategy came to earth in September with sale of those power farms to NextEra Energy, GE Capital and Exelon. More recently, CEO Rob Gillette, who created the strategy for First Solar, has resigned.

     
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    Beacon Power restructuring

    AP reports liquidation of Beacon Power in Tyngsboro, with the U.S. Dept. of Energy getting $28.7 million on its $39.1 million loan for the company's power grid stabilization system in Stephentown, NY, east of Albany. [ Investors purchase alternative energy assets, Boston Globe, February 7, 2012, at http://www.boston.com/news/local/massachusetts/articles/2012/02/07/investors_hunt_failed_alternative_energy_assets/ ]

     
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