A flywheel battery is a system that stores electricity as kinetic energy, in the form of a a wheel that spins at tens of thousands of RPM. Made of carbon fiber and levitated in a vacuum using magnetic bearings, hundreds of flywheels are about to join the power grid in New York.
Flywheels are better than batteries in many applications for a whole bunch of different reasons. They can absorb and release power very very quickly, they don't need much in the way of maintenance, and, most importantly, the amount of storage that they provide doesn't degrade over time like chemical batteries do. They tend to be bulky, and the gyroscopic effect of a big spinny thing means that they can be tricky to integrate into anything that moves, but for stationary power storage applications, flywheels could be the way to go for the future.
It's pretty easy to understand the basic method of operation of a flywheel. It's really just a big wheel hooked up to a generator, and you can either put electricity into the generator to speed up the wheel and store energy, or you can suck electricity out of the generator by slowing the wheel down, just like the regenerative braking system in a hybrid car. The system isn't perfect, and it does cost you something to keep the wheel spinning, but thanks to magnetic levitation and a sealed vacuum, modern flywheel batteries can be up to 97% efficient.
Beacon Power has installed 200 of its flywheel batteries in New York, where they'll provide up to 20 mW of power to take over about 10% of the state's frequency regulation. This just means that as power demand changes, providers need a fast way to ramp supply up and down, and a giant bank of batteries that can be quickly drained and recharged fits the bill perfectly.