More than 200 tops spin in vessels half-buried in the dirt outside Stephentown, N.Y., a town near the Massachusetts state line. Inside the vessel a vacuum permits each top to rotate as many as 16,000 times per minute, despite the fact that each weighs more than one metric ton, thanks to its steel and carbon-fiber composition. Such fast spinning in a vacuum (to reduce friction) allows each top to store some 25 kilowatt-hours of electricity. When the grid's frequency gets out of whack—that is, if the 60-times-per-second current should reverse its flow—all the magnetically-levitated tops speed up, slow down or flip direction to ensure the grid stays in tune.

All told, Beacon Power's flywheels could provide 20 megawatts-worth of such frequency regulation as well as short-term energy storage for the state grid. The only problem is that Beacon's owner went bankrupt in the process of putting the "alternating" into alternating current—after taking a loan for $39.5 million from the U.S. Department of Energy.

"Our company has been operating at a loss," Beacon Power CEO Bill Capp said November 1 in prepared statement [pdf] explaining the bankruptcy. "Our goal in taking this action is to minimize job loss and to continue to find ways to apply our innovative technology in the frequency regulation and energy storage markets."

The good news is that the flywheels are still making money—not enough to keep Beacon in business but enough to potentially pay back the American taxpayer. The flywheels also represent a growing trend in electricity grids worldwide—storage. Sodium sulfur batteries have been used to store electricity from Japan's grid since 2002 and to back up Xcel Energy's wind farms in Minnesota since 2008. Molten salts help a power plant in Sicily store the sun's heat to turn into electricity at night and on cloudy days. Even water pumped uphill at various sites across the U.S. and air compressed into an underground cavern in Alabama, among other places, store electrical energy when it is cheap and give it back when it is expensive. Such storage is considered vital to help intermittent renewable resources, such as the wind and sun, play a bigger role in U.S.—and global—energy supply, but it may be that Beacon's flywheels are simply too expensive to compete with the other technologies on offer.

"Flywheels don't typically hold as much energy as batteries," notes Haresh Kamath, strategic program manager at the Electric Power Research Institute's Technology Innovation Program—an industry-funded research group. "But they last a very long time and that makes them attractive in some applications, especially where the system is cycled very often—that is, where it is discharged and charged repeatedly across a short time period."

A new analysis published November 17 in Science by Kamath and colleagues found that batteries are rapidly becoming cheaper and allow for storing electricity generated when it is not in demand (for instance, during the strong winds that blow late at night when lights are off and factories typically shut down) and using it when it is (daytime peaks). Such storage would greatly extend the potential use of renewables for power but also reduce the necessary investment in the grid itself. In the past it has been cheaper to build a new power plant and lay more cable to connect it to the grid than to install a large battery system. "The initial cost of batteries today is prohibitively high in most cases," Kamath explains. And "the life of batteries is relatively short: Batteries last just a few years but most grid components last for decades."

But it is now more expensive to build new transmission lines and other grid hardware, making battery storage potentially more attractive. "Cost is given as the reason that energy storage is not widely used on the grid," the researchers wrote, and cost reductions in lithium ion batteries—thanks to potential wide-scale deployment in electric vehicles—may change that equation. Big lithium ion batteries may soon be made very inexpensively and in large volumes, making them finally cheap enough for widespread grid storage applications, along with other possibilities. "Electric vehicles themselves can act as storage," Kamath notes. "Of course, the owner of the vehicle would have to agree to that."

Already, power company AES has opened the nation's largest battery installation in Elkins, W. Va. More than 30 megawatts-worth of lithium ion batteries from A123 Systems have been hooked up to the company's 98 megawatts-worth of GE wind turbines to ensure a steadier power output.

There is already a technological leader in the cheap storage area, however: pumped hydro, which accounts for 99 percent of the 127,000 megawatts–worth of electricity storage in use today worldwide. Its spread is limited only by geography, geology and concrete. And, ultimately, more advanced storage options—whether batteries or flywheels—may be undone by another competitor: combined-cycle turbines that employ natural gas and can be started up in seconds. "We need new technologies and techniques to make batteries lower cost, longer-lived and more efficient," Kamath says, especially to compete with fossil fuel–fired alternatives.