Is HOMER able to determine that a flywheel offer spinning reserve?

Yes, HOMER recognizes that the flywheel provides operating reserve (our term for spinning reserve), so the presence of the flywheel reduces or eliminates the need for the diesel plant to provide operating reserve.  That should allow the diesel plant to operate fewer or small generators, saving diesel fuel and O&M expenses.  Whether that makes up for the flywheel’s capital cost and parasitic load depends on a lot of things.