POWER July 2013 - 55

ENERGY STORAGE
average is greater than 95% since inception-
better than any competing technologies. In fact,
the plant is capable of providing 35% of NYISO's
regulation requirements with only 10%
of the market regulation capacity.
To build the Stephentown facility, in 2009,
Beacon Power received a U.S. Department
of Energy (DOE) $43 million loan guarantee
(of which the company drew about $39
million). When Beacon Power Corp. filed for
bankruptcy protection on Oct. 30, 2011, as
part of the bankruptcy court proceedings, the
company agreed, on Nov. 18, to sell its Stephentown
facility to repay the DOE loan.
On Feb. 6, 2012, private equity firm Rockland
Capital bought the plant and most of the
company assets. It has since rehired most of
the staff, renamed the company Beacon Power
LLC, and funded construction of a second
20-MW plant in Hazle Township, Pa., that
will provide frequency regulation services to
PJM. That plant, configured like the Stephentown
Plant, will place the first 4 MW into
commercial service in September 2013 and
the remainder by the second quarter of 2014.
Beacon Power Rebounds
In late April, POWER discussed this remarkable
turnaround with Beacon Power CEO
Barry Brits to explore the underlying cause
of the bankruptcy and how the company expects
to earn revenue and build a business.
Brits shared that in the past, the company
struggled to earn revenue when there was no
market tariff in place that placed a monetary
value on regulation services, particularly
fast-response regulation.
Today, tariff changes are in place in several
ISO regions that will pay for regulation
services. Other markets are developing,
such as MISO and CAISO. Brits believes
that Beacon Power is well situated to compete
in those markets, particularly as the
company's cost/cycle is much lower than
its primary competition, batteries. Brits expects
the remaining ISO markets to follow
suit in time and develop attractive tariff
structures. With an established tariff, Beacon
can build plants and earn a return on
its investment. This is what Brits described
as the company's short-term plan, over the
next year or so.
In the long term, the company will pursue
global opportunities where fast-responding
grid regulation services have a prescribed
market value, particularly in islanding applications
and in regions with high power
prices and a high percentage of renewables.
Not surprisingly, Brits was in Germany exploring
market opportunities when we made
contact by phone.
Brits noted that the Stephentown plant
has provided grid regulation services (called
ancillary services in other regions) for two
years, earning revenue 24/7 while maintaining
high reliability of service. With new
tariffs for these services now available, the
uncertainty that made investors reluctant to
provide financing in the past has been removed.
Brits suggests that there is ample
money available from energy private equity
or from hedge funds to construct new projects
without difficulty. The company's new
connection with Rockland Capital has also
opened new networks for project financing,
expected to be in the range of 50% to 60%
debt-to-equity.
As a taxpayer, it was very good to hear
that Beacon Power has committed to the repayment
of at least 70% of the DOE loan,
unlike other firms that have walked away
from loan repayments. Beacon's repayment
commitment is a good sign that the company
has a strong product and is investing in that
product with a long-term perspective. ■
-Dr. Robert Peltier, PE is editor-in-chief
of POWER.
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