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Beacon Power received a nearly $43 million loan guarantee from the government in August 2010

The Solyndra failure has put alternative energy loans in a negative light as of late, and now the financial failure of yet another renewable energy company is here to add insult to injury. Beacon Power has claimed bankruptcy after receiving government loans as well.

Beacon Power, which creates flywheels to store power and increase grid efficiency by preventing blackouts, filed for bankruptcy protection on Sunday. The company received a nearly $43 million loan guarantee from the Department of Energy in August 2010.

More specifically, Beacon Power owes the Department of Energy $39.1 million and the state of Massachusetts $3.45 million. It received these loans because its technology was seen as aiding grid reliability.

Rep. Cliff Stearns (R-FL), who is leading the recent Solyndra investigation, was quick to attack the Department of Energy with its decision to give not just one bad alternative energy loan, but now two.

"This latest failure is a sharp reminder that DOE has fallen well short of delivering the stimulus jobs that were promised," said Stearns. "Now taxpayers find themselves millions of more dollars in the hole."

The Department of Energy defended its position with Beacon Power, saying that unlike Solyndra, Beacon Power has an operational facility in Stephentown, New York. Solyndra may have closed down completely the day it claimed bankruptcy, but Beacon Power has long term contracts with the Stephentown facility as well as cash reserves, which can be used to pay the government 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," said Damien LaVere, DOE spokesman.

While analysts such as Walter Nasde of Ardour Capital believe Beacon Power's technology was a good idea, CNN reports that the company couldn't survive due to the low rates that the government put in place for utilities. In other words, Beacon Power couldn't charge utilities any more than the rates the government set, and it wasn't enough to keep Beacon Power alive.

The low price of natural gas for generating additional power, its failure to attract investors, and an issue with one of its flywheels in July were also listed as nails in Beacon Power's coffin. In addition, Beacon Power's shares, which were down to $3.44 at the end of February and were recently at below $1 a share, led to a notification from NASDAQ that Beacon would be delisted. The company's shares traded for as much as $47.40 in 2005, but closed Monday at 10.7 cents a share, which gives Beacon Power a market value of $3 million.

"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," said Beacon Power CEO William Capp.

Beacon Power's revenues from the Stephentown plant were $525,000 in Q2 2011.

Back in September, Capp described the government's role in supporting the construction of the Stephentown plant, and how it would have been impossible without the loan.

"We absolutely couldn't have done it without support from the government, because no one was willing to do it," said Capp. "The projects are so huge, that's the problem. If you demonstrate an energy technology on a grid scale, that's $100 million."

The Beacon Power bankruptcy echoes Solyndra's recent failure, which is a solar panel manufacturer that received $535 million in loan guarantees back in 2009. Solyndra filed for bankruptcy two months ago, and there is an investigation looking into whether DOE properly assessed the risks before giving the loan and whether the Obama administration was pushing the loan despite risks in order to meet political deadlines.

Sources: CNN, Washington Post,

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By zolarkingofallmoney on 11/1/2011 10:46:28 AM , Rating: 2
This is pennies that the Govt. put up for an amazing technology return. Watch Becon's assets be scooped up by some smart Chinese firm and we'll be buying our own tech back from them in ten years time. US has never been too bright when it comes to long term investments. Look, there are only a few ways to store electricity. These guys have a pretty good solution. Hopefully Intel or Microsoft or Apple will buy them and keep it here. They actually built a plant that WORKS! It was cheap (non-renewable) gas prices and govt. deciding what they could charge that did them in. Without the Govt. investment we would not have ever reached the Moon or created the B-1 bomber. These large scale public utility plays are the only way to avoid smog filled air, acid rain and nuclear waste nightmare issues over the next twenty years. All you Govt. spending haters should realize that this company was trying to HELP the average Joe by removing the spot market scarcity plays that speculators used in California to bleed the state dry. Not all Govt. spending is bad. Especially when it works!

By OneArmedScissorB on 11/1/2011 10:53:55 AM , Rating: 2
Not all Govt. spending is bad. Especially when it works!

Citation needed.

Your argument was essentially to allow the government to waste money and manipulate people because a free market business had a good idea, even though you stated that government intervention was also the problem.

So which is it?

By Beenthere on 11/1/2011 11:23:18 AM , Rating: 2
Those $$$$ are MY $$$$ and the gov has no right to irresponsibly grant loans to anyone. If this tech is so great then this company should have had no problems raising capital to fund development. Unfortunately most government is just as corrupt as the companies it hands money and contracts too...

By YashBudini on 11/1/2011 9:33:13 PM , Rating: 2
The US spent a lot of years writing blank checks while playing the F card (fear). Now they're playing the G card (green).

As originally stated, 2 parties, just 2 sides of the same coin. If you think you're party is better then all you've done is to con yourself.

"I modded down, down, down, and the flames went higher." -- Sven Olsen

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