Another alternative energy company that received a loan guarantee from the U.S. government has filed for bankruptcy.
Beacon Power, which makes energy storage devices used to help the power grid become more efficient, filed for bankruptcy protection Sunday, according to a filing with the Securities and Exchange Commission. The company received a $43 million loan guarantee from the Department of Energy last August.
“This latest failure is a sharp reminder that DOE has fallen well short of delivering the stimulus jobs that were promised,” Florida Republican Rep. Cliff Stearns said in a statement Sunday night. “Now taxpayers find themselves millions of more dollars in the hole.”
Stearns is leading an investigation into the bankruptcy of Solyndra, a solar panel maker that received a $535 million government loan guarantee last year. The Beacon bankruptcy will likely add fuel to the probe.
But the DOE was careful to draw distinctions between Beacon Power and Solyndra.
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DOE spokesman Damien LaVere noted Monday that, unlike Solyndra, which closed up shop on the day they declared bankruptcy, Beacon has an operational facility in Stephentown, N.Y., which has long term contracts that it can use to generate money.
In addition, the company has cash reserves, and the government is first in line to get paid back.
“Protecting taxpayer dollars remains the top priority for Secretary (Stephen) Chu and the Department, which is why we were careful to include many protections for the taxpayer in the loan guarantee for the Stephentown project,” LaVere said in a statement.
Beacon did not return calls and an e-mail seeking comment.
The company makes an advanced flywheel that is used to store electricity until it is needed by the grid.
The device works by suspending a large carbon cylinder between two magnets in a vacuum-sealed tube. When the grid has excess power, the devices are spun. They require some electricity to get them spinning and, thanks to the magnets and vacuum, remain in motion with relatively little energy loss.
When the grid needs extra power, the spinning cylinders are used to generate it.
The devices are used by utilities to prevent blackouts. Instead of having to build new power plants that are only used when power usage is greatest, such as during hot summer days when air conditioners draw large amounts of energy, they can build a plant using these devices.
Beacon’s facility in New York is one such plant. It can store 20 megawatts of power, about one-50th the output of a nuclear reactor.
Developing a good energy storage system is also essential if power sources such as wind or solar, which do not work when there is no breeze or at night, are to be more widely adopted.
But Beacon’s finances came under pressure thanks to low rates government regulators forced it to charge utilities.
As a regulated industry, utilities were only allowed to pay a fixed rate set by government regulators for Beacon’s services, the DOE said. The rate was not high enough for the company to survive.
The low price of natural gas, which could be used to generate additional power and therefore competes with energy storage, was also a factor.
The Federal Energy Regulatory Commission recently increased the rates companies such as Beacon can charge, but the hike has yet to take effect, the DOE said.
Even if the government doesn’t lose money on the Beacon bankruptcy, it’s unlikely to silence critics of the DOE program.
Stearns and other critics say the Solyndra guarantee was made improperly. They say the Obama administration put private creditors ahead of the government when it comes to being paid back, and that the loan may have been made due to political connections between one of the company’s main backers and the administration.
Critics have also held it up as an example of why the government should not be trying to fund renewable energy companies.
The administration says everything about the loan was proper. It and other supporters say that while the bankruptcy was unfortunate, the broader goal of creating jobs and helping American companies compete in a race to find cleaner energy technology is worth the risk.
Nonetheless, the administration has initiated an independent review of all aspects of the loan program.
The loan program was started by President George W. Bush and expanded under President Obama as part of the stimulus effort. It has backed nearly $40 billion worth of loans so far in areas such as renewable energy, nuclear power and advanced auto technology. The renewable energy component, which backed both the Solyndra and Beacon loans, recently ended.