Seeking buyer who sees the light

Dec 14 - McClatchy-Tribune Regional News - Larry Rulison Times Union, Albany, N.Y.

Even though Beacon Power has placed its 20-megawatt flywheel operation in eastern Rensselaer County on the market to repay a $39 million U.S. Department of Energy loan, it is still hoping to manage the plant.

A Beacon spokesman said Tuesday that the best-case scenario would be that an investor buys the plant while taking a stake in the Boston-area company.

Beacon, which is going through a bankruptcy reorganization, previously said it has had preliminary discussions with both private equity firms and other groups interested in making a substantial investment in the company.

Beacon spokesman Gene Hunt said Beacon executives are best suited to manage the company's flywheel operation in Stephentown, which provides so-called frequency regulation services to New York's electrical grid.

"The plant without Beacon is worth a lot less than with Beacon," Hunt said. "So that's what we're looking for."

The New York Independent System Operator pays Beacon for helping to balance supply and demand along the state's high voltage electric system. In order to keep the electric grid stable and reliable, current is kept at a frequency of 60 hertz. Frequency regulation ensures that the demand for electricity is met with the proper amount of supply.

Traditionally, this is done by either firing up or shutting down fossil fuel power plants.

But flywheels, which contain special spinning cylinders that run on kinetic energy, can pull electricity off the grid and quickly return it -- doing the same job as power plants but much more quickly, cheaper and without harmful emissions caused by burning fossil fuels like coal and natural gas.

Flywheel technology is so beneficial to the electric grid that federal regulators recently ordered the NYISO and other grid operators to increase the fees they pay to flywheel plants, a move that is expected to make the Stephentown facility substantially more lucrative.

Under political pressure following the high-profile bankruptcy of solar manufacturer Solyndra, the DOE got Beacon to agree to sell the Stephentown plant by the end of January in order to repay $39 million that had been drawn down by the company from a $43 million loan.

Beacon is also developing a flywheel project in Pennsylvania and had planned one for Schenectady County. Hunt, the Beacon spokesman, said the $53 million project in eastern Pennsylvania has lined up nearly $30 million in state and federal funding. That makes Beacon that much more attractive to an investor. What's unclear though is if a sale of the Stephentown facility will cover the DOE loan.

"We expect that the Stephentown plant will sell," Hunt said. "But we don't know for how much."

Reach Larry Rulison at 454-5504 or at lrulison@timesunion.com.