Flywheels (no matter their size) can be operated in near vacuum with magnetic bearings[0]. Friction can be really low. A funny aside is that they have to be aligned with earth's rotation so they don't resist it.
My thought is that the weight of the flywheel matters. To be able to absorb / release a tremendous amount of power, I imagine this flywheel would need to be very heavy. If so, wouldn't it non-linearly differ in efficiency from the near vacuum & magnetic bearing designs we've built before?
Perhaps the proposal is to build a large array of smaller flywheels that don't have to deal with the problem I imagine?
I'm not familiar with any part of engineering here -- just a curious soul -- sincerely asking!
Not that I know much about flywheel engineering. But machines tend to become more efficient the bigger you build them.
With flywheels, I don't see the bearings as difficult. I mean it's sure a challenge to keep a few tons afloat, but nothing unsolved. I'd assume (but don't know) that you can scale magnetic bearings a few orders of magnitude with their properties staying the same.
On the other hand, the faster you spin flywheels, the more energy they store. And here comes the limitation: The material they're made of has to sustain all tearing force. So at some point you'll add mass instead of spinning faster.
[0] https://en.wikipedia.org/wiki/Magnetic_bearing