"If flywheels seem like an exotic energy storage solution, that’s largely because they have generally been relegated to niche applications. A spokesperson for Qnetic told pv magazine USA that grid-connected flywheel pioneer Beacon Power deployed 400 of its 100 kW (25 kWh) units at two utility sites in New York and Pennsylvania between 2011 and 2014 to provide fast-responding frequency regulation. Each location had 200 units with a nameplate capacity of 20 MW (5 MWh), and both are still providing frequency regulation service and generating revenue."

I would assume that flywheels are exotic because their niche (short- to mid-term storage, quick reaction times) wasn't much needed so far in a grid dominated by non-renewables. This will probably change in the future.

But for the same reason I don't get all that talk about competing with lithium-ion batteries. Flywheels don't really fit the same category as batteries. And lithium-ion batteries in particular are not well suited for grid-level storage anyway. Their benefit at the moment is basically just availability because that's the type of battery that was produced and optimised at scale for –at least– the last decade.