dynobill's pages -->Everything you ever wanted to know about Engine Dynos
An inertia dyno, (sometimes called an acceleration dyno) is a system which measures work (Torque/Horsepower) based on the acceleration of an object of a known mass. This "known mass" can be any number of items, assuming you know the weight of the object, the distance it was moved, and the time needed to move the object. For our purposes a wheeled vehicle is most easy to visualize. Any vehicle takes a certain amount of power to accelerate from one given speed to another. If you know the weight of the vehicle you can calculate how much work (torque) it takes to do the acceleration, and if you know the time it takes to do the acceleration you can figure Horsepower.
Simplified formula: 550ft/lbs of work/second = 1 Horsepower
In this case a flywheel spinning on an axle can replace the vehicle or "mass". If you determine the amount of energy required to accelerate the flywheel from one given rpm to another and the time it takes to do the acceleration you can calculate the torque/horsepower produced.