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YES! Sorry, I don't see why batteries are being used for KERS at all. So much energy would be goin into manufacturing them and their life is probably quite limited.
Now flywheels, get one of those carbonfibre things spinning and you've got yourself some good stuff, in my opinion. Bearings might be an issue as it'll need alot of RPM but that's not something F1 has ever had a problem with.
A lot of RPM? That's right. How does 40,000RPM sound?
Carbon fibre isn't suitable - they need dense metals to make the radius as small as possible, causing as little gyroscopic disturbance as possible:
Rotational Energy: E = w^2 * m * r^2 - so halving the radius is better than halving the mass.
Williams also developed a flywheel system but aren't using it straight away.
All the rest of the teams have gone the electric route.
Williams' flywheel is an electronically-transmitted system: The energy is picked up via an electric generator, transferred to the flywheel which gets spun up by another motor, and then the other way around. Honda's was purely-mechanical.