“The First No-Fuel Power Plant”

By Travis Johnson, Stock Gumshoe, September 17, 2007

This one is from Chris DeHaemer at Taipan’s Red Zone profits, and it looks like it circulated pretty heavily on Friday and over the weekend.

It’s for a company that uses momentum, in Dehaemer’s description, to store electrical energy, and essentially runs a big “momentum battery” that they use to buy up electricity at low rates overnight, then sell it again back to the grid at higher rates during the middle of the day. This is in the unregulated, auction-based energy markets, of course, which are available in many states.

The idea, according to the teaser, is that this company can make a killing without ever having to generate any electricity on its own — and it makes sense on a basic level, since we all understand the “buy low, sell high” business plan. Many of us, in fact, try to follow it.

So … what is this magical company that can store power and instantly re-sell it to the grid when demand spikes?

Well, when DeHaemer talks about “momentum” it’s pretty clear that he has to be talking about flywheel technology — giant heavy wheels, often running in a vacuum, that regulate and, in some cases, store energy with, hopefully, minimal loss. This is not too different from the concept that provides some of the power to the Toyota Prius, though in that case the actual wheels are “flywheels” — when you step on the brake, it sends that kinetic energy from the wheel back to the battery to use for running the engine.

And in a flywheel power plant I imagine it must work similarly (in case you can’t tell, I’m NOT an engineer) — the plant pulls energy off the grid to get the flywheels rotating, tries to develop an environment that allows them to keep spinning without losing much energy, and then, when the power is needed again, the momentum of the flywheel is attached to a generator that can spit electrical power back to the grid.

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OK, so I’m not going to win any technical writing awards for my delightful and colorful description of the flywheel power plant, but I think I get the basic idea. Hopefully you do, too.

So, what is this flywheel power plant company, trading at $1.50 at the end of August, according to the teaser (though as far as I can tell, the teaser didn’t start circulating until Friday, September 14, when the shares were appreciably higher)?

Well, the other clues should help us to sleuth this one out:

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Insiders have bought heavily this summer, since July 6, 2007.

And DeHaemer tells us that “it could produce the highest profit margins in the history of the utility industry.”

So … figured it out yet? Maybe so, but I’ll tell you anyway … loyal reader Stonecutter and I both agree that this company is …

Beacon Power Corp. (BCON)

And it has had a wild couple of weeks, during which big news came out about several things: a $10 million cash infusion, testing success for their product, and news about preparing for manufacture and the launch of the actual power plant by early next year.

And, being an occasional sucker … er, investing enthusiast … myself, I actually thought about dabbling in shares of this one with my own cabbage when the press releases were flowing from the company last week. Don’t worry, I don’t actually own any shares, but I’m always tempted by interesting technologies like this.

Unfortunately, I’m a bit of a sucker for innovative electrical power companies — one of my larger mistakes, which remains in my portfolio at a huge loss so far, is MMC Energy (MMCN), which is a more conventional electricity generation company, albeit one with it’s own special niche (unfortunately, a niche that they’ve grown much more slowly than I was hoping).

So I certainly wouldn’t consider my interest in the shares to be at all significant, except perhaps as a contrarian indicator.

As with most startup companies and projects like this, it’s very hard to get any idea of when they might become profitable … if they ever will. Of course, since they’re starting up their plant probably over the winter, and winter is a generally low rate and low usage time for electricity, this is not perhaps the time to build wealth through an eletricity rate arbitrage scheme like this … or get attention from the media due to high electricity rates.

But what about this company? Well, if you want to know more about them one thing to really focus on that newsletters almost never cover well, and certainly almost never note in their teasers, is competition — and BCON, as you’re probably aware, did not invent the flywheel. There are a few other power companies of varying focus who sell or manufacture or use flywheel products for electricity storage, they did a quick overview of a few of them over at Stockerblog a few months ago that might help you go get started.

The company is, to get down to brass tacks, a long way from being profitable. These are expensive installations, and I have no idea what their plans are for a second plant, or for expansion. While the Northeast is an appealing place for electricity companies due to the utilities’ inability to build new plants very easily thanks to NIMBY concerns, it’s not the most taxed electrical grid in the country — usually southern California gets that nod, especially in the Summer, so that’s where most of the energy traders of the last, scandal-ridden school got their chops (Enron, et al). It would be nice to see the company try this in other markets, too, which may already be in the plans for all I know.

In my mind this ends up looking risky in a few ways: It’s a bet on a technology that hasn’t yet proven itself on this scale and in this kind of real world usage; it’s a bet on continued high energy rates and a continued open auction market for electricity; and it’s a bet that these guys are better than and/or ahead of their competitors. I’m most sanguine about that last one, since this is a new product/service and, if it works, there may be plenty of room for it to grow even if several companies get into the game. The other two, I’m not so sure.

If anyone else is an expert on flywheel energy storage … or has looked at Beacon or any of the other companies in any detail, please feel free to share. I do see potential, but that doesn’t necessarily mean much … potential without earnings can only last so long.


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Anonymous
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Anonymous
September 17, 2007 4:35 pm

“The First No-Fuel Power Plant”? I would have thought that any solar array or any hydro plant could claim the ‘no fuel’ distinction. Anyway, there IS fuel for the flywheel—it’s electricity.

One Guy
Guest
One Guy
September 17, 2007 5:56 pm

You’re right, of course — this is “no fuel” electricity in the same way that electric cars don’t have emissions — they get someone else to burn the fossil fuels for them.

Dilly
Guest
Dilly
September 17, 2007 6:01 pm

Potential means you ain’t done it yet. — Darrell Royal

uthr
Guest
uthr
September 17, 2007 6:23 pm

The technique of storing electrical energy in other energy forms is not new. “Pumped storage” uses the same idea of pumping water uphill when electrical power is cheap, then recovering electricity from the water (using gravity through turbine generators) when power is needed/expensive. Not new and depends heavily on time-of-use pricing differentials. Some utilities already do this to help balance electricity use and reduce capital expenditure for the heavy load spikes. I expect if momentum flywheels are cost-effective, it wouldn’t be hard for utilities to add this technology. Low barrier to entry for existing utilities and newcomers, or in Buffett terminology, there’s no moat.

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b.eiland
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b.eiland
September 17, 2007 8:04 pm

I’ve had quite an interest in Flywheel Energy Stowage ever since late 60’s when John Hopkins Labs first suggested their use. On a boat design forum you can view some of my postings on the subject, http://boatdesign.net/forums/showthread.php?t=9630&page=11
see items 163-206.

Quoting #201, “I’m not so sure this alone hampered further development. Fuel cost in this country have been so low compared with the rest of the world there just has not been real economic reasoning for development of alternative methods, devices, technology. Maybe that will finally change with this new realization of world fuel prices. Hopefully we will see a whole host of new technologies get new research.

One of the problems I saw with the flywheel work was an ‘over emphasis’ on getting the whole technology optimized to its ultimate state prior to putting a product on the market. Yes, it is optimum that the chamber housing the flywheel maintain a near perfect vacuum so as to optimize the aero-frictional losses of the spinning wheel. But what’s to prevent the allowance for a less than perfect vacuum and accepting some losses while we move towards a more optimum system. What’s to prevent maintaining a safety limit on allowable revolutions now, until better wheels are developed? What’s to prevent the use of these in underground (safe) installations at ‘base line’ power stations as ‘peaking device’ stowage, now??

Just as with the very early Swiss bus system usage, there are lower-tech practical uses for these devices right now. Lets get started now, then build upon the technology as we learn more. I think these higher fuel prices will promote such thoughts if we don’t let ourselves slip back into the old modes of “fuel prices will come back down eventually”

Why not a lower-tech approach with a commuter car for now? Don’t worry about an onboard charging source. Utilize a slightly lower tech, safety-limited spinning wheel, rechargable at night at your home, that would get you to work and back. And package it up in smart little ‘cute’ car like the BMW mini rather than some ugly aero-look. I’ll bet you couldn’t keep them on the sales lot right now. And you wouldn’t be worrying about replacing those very expensive, heavy batteries in the current hybrids.

sharkproof
Guest
sharkproof
September 18, 2007 2:43 pm

The only “No Fuel Power Plant” that I’ve found is this one.

http://ausra.com/

Unfortunately they aren’t a public company but appear will be possibly someday. It appears the start up costs won’t be as prohibitively expensive as the concept seems pretty simple. Typically in my experience the simpler the more successful.

I’m new here, but love the work that I’ve read thus far. Love to hear what the Gumshoe and group have stealthed out that resulted in some bread in the bank.

Regardless, been very interesting reading thus far. Thanks Gumshoe.

Anonymous
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Anonymous
September 25, 2007 2:28 pm

I purchased 100 sh of bcon
power about 2005 for $2.00 per
share.. its gone nowhere since
and has never been in the profit
zone until i sold it about May
2007 at a minor loss.
it never had any momentum nor
visible prospects nor visible
leadership from its hide bound management…

Anonymous
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Anonymous
October 5, 2007 2:04 pm

Hey Gumshoe: Thanks! I really like your creative writing style combined with the novel idea of sniffing out recommended stocks along with the grid results.
I suspect you’ve been in the writing business for awhile, one way or another. Despite your caveats I hope your investments have been profitable.
Your cadre of respondents are insightful and skeptical, skills necessary in the investment “game”.
I previously said I’d subscribe.
Again, thanks.

Anonymous
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Anonymous
October 14, 2007 3:24 am

TFN is touting a $1.29 stock in China and a solar energy stock. A little tight on Mortgage money and would like o see if any gummers could help with the names. Thanks pillman

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Anonymous
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Anonymous
November 3, 2007 10:28 pm

Active Power ACPW has a flywheel
back-up system. You might be interested in trading them for the flywheel effect!
Also, a stored energy idea, STLOF
was based on stored hydraulic power
and appeared to be a viable mileage booster on vehicles but was only full of promises.

Anonymous
Guest
Anonymous
November 9, 2007 11:46 pm

This following is WGPMF
Outstanding Investments
Nov. 9, 2007

New “Slow Volcano” Energy Mandate

Dear OI subscriber,

A new California law could be creating one of the biggest energy opportunities since nuclear power came on the scene in the 50’s. The law will force California to produce 20% of its power from sources such as “slow volcano” power.

Luckily we’ve known about this “slow volcano” power for sometime now. And our resident energy expert Byron King has come up with the best possible ways for you to cash in on this new power source.

It’s all spelled out in the report below, take the next 10 minutes to read on…

Enjoy,

Matt Insley
Associate Publisher, Outstanding Investments

“Slow Volcano” Power Could Soon Light Every Streetlight in San Francisco…

without Burning One Ounce of
Coal, Oil or Gas

California Senate Bill # 107 Will Legally Force California to Produce 20% of its Electricity from Sources Like “Slow Volcano” Power by December 31, 2010…

AND — 18 MIT Scientists Say that “Slow Volcano” Power Can Produce 2,000 Times the Amount of Electricity that America Consumed in the Year 2005…

This Company is the Only pure play on Californian “Slow Volcano” Power…and You Could Buy 100 shares for only $38

Dear Curious Reader,

Right now, a “slow volcano” broils deep beneath the brown mountains 72 miles north of San Francisco.

Don’t worry though. This volcano will never erupt.

You see, unlike other volcanoes you know about, this “slow volcano” has no opening to the earth’s surface.

It’s completely underground. So it can’t erupt. That’s why I call it a “slow” volcano.

But did you know that you can harness the “slow volcano” heat to light the streetlamps of San Francisco? Same for the air conditioners, stoves, refrigerators and flat panel TV’s..?

Let me explain…

How “Slow Volcano” Power Could Soon Light
the Streetlamps of San Francisco

Although it sounds mysterious and impossible, it’s simple.

A “slow volcano” spews out heat. This cooks the nearby ground water.

The water turns into steam.

Then, you drill a hole in the ground and let that steam spin a turbine.

The turbine spits out electricity.

It works just like a coal or natural gas power plant.

Except those two types of plants use heat from burning fossil fuels to boil water. Then they use the steam to spin turbines.

Same with nuclear power. But the heat that makes the steam comes from an atomic reaction.

But, as you probably noted, “slow volcano” power pumps out hot steam WITHOUT burning any fossil fuels or using rare uranium.

That stunning fact makes “slow volcano” power the ultimate in renewable energy. More on that in a moment.

But first: why San Francisco and why now?

The largest, most productive “slow volcano” in the world sits a short 72 miles north of San Francisco.

Nestled under the Mayacamas Mountain range in Sonoma wine country, today this “slow volcano” pumps out 750 megawatts of electricity. That’s enough to power 750,000 homes, or a city the size of San Francisco.

You ask “Ok, but why now?”

How the California Gov’t Forced Massive Growth in Energy Sources Like “Slow Volcano” Power over the Next 2 Years

California recently passed Senate Bill # 107.

This bill says that 20% of electricity sold in the state must come from renewable sources by December 30, 2010. And Governor Schwarzenegger hurried to place a 33% target by 2020.

Let’s put those numbers into perspective…

First you should know that California has the world’s sixth largest economy. That’s big. Bigger than the entire countries of Italy and China!

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Constance
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Constance
November 13, 2007 8:11 pm

WGPMF – no such symbol ??????

Anonymous
Guest
Anonymous
November 13, 2007 9:19 pm

I too received a post about “slow volcano” power. However, I have yet to find any other reference to it. Have you investigated this one and if so, what are your results?

Regarding flywheel power: without e