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Electric transmission and distribution has long been a tough nut for technology innovation. But deregulated power markets are helping technology developers bypass notoriously tight-fisted, conservative utilities.

TransÉnergie led the way, using DC power technology to build its own “merchant” power lines that carry power for the highest bidder, rather than simply serving the local utilities (see “TransÉnergie: Playing Two Power Games”).

Now energy storage developer Beacon Power Corp. of Wilmington, MA, is proposing a similar end-run around slow-moving utilities. Rather than marketing its flywheel-based energy storage systems to utilities, the company plans to build its own merchant flywheel plants that move power on and off a power line to stabilize the grid.

It is an idea that’s attracting attention from the independent system operators (ISOs), the regional organizations charged with operating the nation’s power grids. California’s and New York’s ISOs are already testing Beacon Power’s equipment. And Matt Lazarewicz, the company’s chief technical officer, says an equally important constituency to impress is Wall Street. According to him, the merchant model is the only model Wall Street will finance. “The returns are higher that way,” says Lazarewicz. “As soon as you say a utility’s going to buy something or do something, investors roll their eyes and walk away.”

Beacon Power’s flywheel energy storage systems are designed to provide frequency regulation – a service for which ISOs paid more than $600 million last year. Grid operators need help with frequency regulation because the frequency of a grid’s alternating current is constantly fluctuating as electric devices and generators turn on and off, causing temporary imbalances in power production and demand. Unmet demand puts a strain on a grid’s power plants, slowing them down and dragging the grid frequency below its set-point (60 hz in North America, 50 hz in Europe and most of Asia). Excess supply has the opposite effect. And either condition can cause utility lines and power plants to automatically disconnect from the grid, thereby preventing damage to utility and customer equipment, but also increasing the risk of blackouts.

ISOs currently rely on fossil-fuel power plants – primarily gas turbines – to smooth out a grid’s frequency variations. Utilities bid to provide this service, in doing so, placing a set proportion of their power plants’ capacity (some 1-2 percent of a grid’s total power generation) under the ISOs’ direct control. On signals from ISOs, designated plants ramp up and down to roughly balance supply and demand. It’s a costly and polluting process because power plants burn their fuel most efficiently when run steadily and at full capacity. “Doing regulation with fossil-fuel generation is the tail wagging the dog,” says Imre Gyuk, who runs the U.S. Department of Energy’s energy storage research program.

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