Beacon Power Corp
Second Energy Department-backed company goes bankrupt
A Massachusetts company that received a $43 million Energy Department loan guarantee last year filed for bankruptcy Sunday, a step certain to fuel criticism of federal green energy financing in the wake of the solar company Solyndra’s collapse. Beacon Power Corp., which develops energy storage systems, filed for bankruptcy protection in the U.S. Bankruptcy Court in Delaware.
Second Energy Department-backed company goes bankrupt
A Massachusetts company that received a $43 million Energy
Department loan guarantee last year filed for bankruptcy Sunday, a step
certain to fuel criticism of federal green energy financing in the wake
of the solar company Solyndra’s collapse.
Beacon Power Corp.,
which develops energy storage systems, filed for bankruptcy protection
in the U.S. Bankruptcy Court in Delaware.
Beacon sought bankruptcy protection two days after the White House ordered an independent 60-day evaluation of the Energy Department's loan programs aimed at ensuring effective management and monitoring.
The review, conducted by a former Treasury Department official, will include examination of how Beacon’s project is performing going forward, and whether there are additional steps that can be taken to protect taxpayers, according to the Obama administration.
The Beacon
bankruptcy comes roughly two months after the California solar panel
maker Solyndra, which had received a $535 million Energy Department
(DOE) loan guarantee in 2009, went belly up and laid off 1,100 workers.
Solyndra’s collapse unleashed a torrent of GOP-led attacks on the Energy Department’s loan guarantee program.
Solyndra
and the broader loan guarantee program are under investigation in the
House Energy and Commerce Committee and the House Oversight and
Government Reform Committee.
“This latest failure is a sharp
reminder that DOE has fallen well short of delivering the stimulus jobs
that were promised, and now taxpayers find themselves millions of more
dollars in the hole,” said Rep. Cliff Stearns (R-Fla.), the GOP’s point
man on the Solyndra investigation and a senior member of the Energy and
Commerce Committee, in a statement to The Hill and other outlets.
“Unfortunately
for the American taxpayers, I am deeply concerned that other DOE
programs could follow which goes to the heart of the President's flawed
economic program,” he said.
Stearns is chairman of the Energy panel’s Oversight and Investigations subcommittee, which is expected to vote Thursday to subpoena internal White House communications about Solyndra.
Energy
Department spokesman Damien LaVera said there are “many protections for
the taxpayer” in the agreement with Beacon Power.
“The
Department’s loan guarantee is for the project Stephentown Regulation
Services, LLC, not the parent company, and the loan was set up in a way
that ensures the Department is not directly exposed to the liabilities
of the parent company,” he said in an email Monday.
The department also sought to contrast the Beacon Power project and Solyndra, noting that Solyndra stopped manufacturing operations when it went bankrupt, while Beacon Power intends to continue operating the New York energy storage plant.
“It is important to note that this plant itself, which is operational and generating revenue, is a valuable collateral asset. In addition, under the terms of our loan guarantee agreement, Stephentown Regulation Services, LLC currently has cash reserves and proceeds from the plant that it was required to hold as collateral on the loan,” LaVera said.
The Energy Department also
noted that the federal government retains its “senior status” for
repayment in the loan agreement with Beacon Power.
In contrast,
the Solyndra loan guarantee was restructured in early 2011 to put
private investors — who had agreed to provide another $75 million to the
struggling company — first in line for repayment if the company
liquidated.
Beacon drew $39 million of the guaranteed loan to help finance the plant.
Beacon’s bankruptcy filing lists assets of $72 million and debts of $47 million, according to Bloomberg.
“The
current economic and political climate, the financing terms mandated by
DOE, and Beacon’s recent delisting notice from NASDAQ have together
severely restricted Beacon’s access to additional investments through
the equity markets,” CEO F. William Capp said in the bankruptcy filing,
according to the financial news service.
The Energy Department
has lauded Beacon’s flywheel energy storage technology as a way to
improve power grid stability and help bring renewable power sources into
the system.
“We will continue to support the development and
deployment of innovative energy systems like this energy storage project
that support our goal of expanding renewable energy generation and
reducing greenhouse gas emissions,” Energy Secretary Steven Chu said
when announcing the finalization of the agreement in August of 2010.
The
loan guarantee program was first authorized in a 2005 energy bill
crafted under GOP control of Congress and signed into law by
then-President George W. Bush, and expanded under President Obama’s
stimulus law.
The program was slow to get off the ground, and
the first loan guarantees were not issued until the Obama administration
took power.
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