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Ener1's EnerDel subsidiary, which is wholly owned, won an $118.5 million grant in August 2009 from the U.S. Department of Energy to develop electric batteries

The Obama administration has had some horrible luck when it comes to dealing out energy loans. In 2011 alone, two energy companies filed for bankruptcy after receiving hefty sums from the government. Now, the administration can add a third strike to its list of bad deals.

Ener1 Inc., a company that provides efficient technology for the auto industry, filed for bankruptcy protection yesterday. The company's EnerDel subsidiary, which is wholly owned, won an $118.5 million grant in August 2009 from the U.S. Department of Energy to develop electric batteries for a Volvo electric vehicle and Think models. So far, EnerDel has spent $55 million of the $118.5 million.

"This was a difficult, but necessary, decision for our company," said Alex Sorokin, Ener1 CEO. "We are extremely pleased to have the strong support of our primary investors and lenders to substantially reduce the company's debt. Their support demonstrates that our business partners have an appreciation for our future business opportunities in proving energy storage solutions for electric grid, transportation and industrial applications. We expect the new funding to provide ample liquidity for our subsidiaries to meet their ongoing obligations to employees, customers and suppliers."

Ener1 is looking to jump on a restructuring plan that will provide $81 million to recapitalize the company and reduce its debt. Also, the company's existing common stock will be canceled, long-term debt holders will receive a new term loan, cash and new common stock in exchange for claims, new preferred stock will be given to the provider of the post-petition and exit funding, and Ener1's general creditors will be paid under the restructuring plan.

Vice President Joe Biden toured Ener1, located in Greenfield, Indiana, in January 2011. Biden believed the loan still seemed like a good move at the time, since Obama was pushing to put 1 million electric vehicles on the road by 2015 and needed electric batteries to do so. But in June 2011, its largest customer, Think Global, which filed for bankruptcy, affected Ener1. It has since been a downhill battle for Ener1, which was delisted from NASDAQ in December 2011.

"The Department of Energy's grant to EnerDel is supporting a cutting edge battery manufacturing plant that is producing batteries in America that are being sold across the country and around the world," said Jen Stutsman, spokesperson for the Energy Department. "This grant is part of the department's efforts to commercialize promising vehicle technologies that will help America to reduce our dependence on foreign oil and ensure U.S. companies can compete in the global auto industry. While it's unfortunate that Ener1, the parent company, has entered a restructuring process, the new infusion of $80 million in private capital demonstrates that the technology has merit. As the company has said, the restructuring is not expected to impact EnerDel's operations and they do not expect to reduce employment at the site."

Despite the bankruptcy filing, the Department of Energy said the program is still moving forward and Ener1 will continue to operate normally. Employees are also expected to keep their jobs.

In addition to the $118.5 million grant from government, EnerDel also received $10 million in grants from the Bush administration and another $7.1 million in tax credits from Gov. Mitch Daniels (R-IN) to create the electric batteries.

Electric batteries for EVs have recently fallen under the spotlight due to General Motors' Chevrolet Volt, which had battery fire issues throughout 2011. Four different Volts participated in side-impact crash tests conducted by the National Highway Traffic Safety Administration (NHTSA), and three of them sparked or caught fire. This led to an investigation, which resulted in GM CEO Dan Akerson being called to testify in front of Congress this week. Thousands of Volts were also recalled to receive a steel piece that would better protect the lithium batteries.

Ener1's failure marks the third bad energy loan dealt by the Department of Energy. In September 2011, Silicon Valley-based solar panel company Solyndra filed for bankruptcy after receiving a $535 million loan from the DOE in 2009. Government officials reportedly warned the administration of the viability of Solyndra, saying the company would go bankrupt in a matter of two years. The warnings were put aside in order to meet political deadlines.

Later in November 2011, Beacon Power, a company that creates flywheels to store power and increase grid efficiency by preventing blackouts, filed for bankruptcy after receiving a $43 million loan guarantee from the Department of Energy in August 2010.

Sources: Businessweek, The Detroit News

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By Smilin on 1/27/2012 1:17:08 PM , Rating: 2
The last what five presidents have tried to gain our independence from foreign oil. Obama has made some modest (at best) strides towards greener energy.

We're about to leap out of the frying pan and into the fire. The next five presidents will be trying to reduce our dependence on foreign alternative energy.

Over 3/4 of all solar panels sold in the US come from China. They come in about 10% cheaper (not much huh?) but it's enough to snatch the market. They are able to do this because they get 30 *billion* in subsidies from their govornment.

Meanwhile we're ready to crucify any politician that tries and fails. We're also willing to ignore every success and concentrate on those failures. The lobbiests for oil/gas show up with truck pallets of cash and run advertisements constantly.

In other words our country is completely hostile to any attempts take the lead in alternative energy. Soon we'll be borrowing from china to buy oil and solar panels. Our economy will suffer horribly when energy costs rise...because yes, someday it will be $8 a gallon for gas. Our competitors will have paid their upfront investments and will be reaping nearly free energy for their juggernaut economies.

Screw Solyndra and the latest. A bad bet. There will be more bad bets. Do it anyway. Stop being a wuss. Set a goal of having 75% of all solar panels sold in China be made in the USA instead. Be bold or get left behind.

RE: China
By StanO360 on 1/27/2012 1:54:35 PM , Rating: 2
Your ignoring the primary subsidy to the end user. Almost no one would be buying solar from the US OR China if governments weren't subsidizing them! The same is true with electric cars.

The big union give away to GM and Chrysler might seem good, but don't forget this is the SECOND time Chrysler got bailed out and now the money is going to Fiat! Both companies would still be around it's just that they would be leaner and the fat union contracts would be gone in bankruptcy.

RE: China
By Smilin on 1/27/2012 4:32:46 PM , Rating: 2
Nope. A good point and not ignoring that at all. re-read please.

I won't even begin to speculate when gas would hit $8/gal. But I'm willing to guarantee this: Energy prices are not on a downward trajectory. The need to subsidize to compete against fossil fuel will not remain. The reason we're even doing fracking these days is because the cost of oil/gas makes it viable. Same thing with the tar sands in Canada...that is not an efficient way to produce oil.

I'll skip the auto industry portion of the discussion. It's a very complex situation and worthy of more discussion that I'm willing to give right now.

RE: China
By osserc on 1/27/2012 2:21:54 PM , Rating: 2
Switching to alternative energy, even if every single wind-turbine and solar panel were manufactured entirely in the US, wouldn't solve any of our foreign dependency problems.

It may *theoretically* help our dependence on foreign oil. However, all of these alternative energy products rely heavily on rare earth metals. Since China now controls over 95% of the rare earth metals market our new-found freedom from foreign oil would just get replaced with dependence on Chinese REMs. That's not a very benign solution.

Honestly, I'd rather be at the mercy of the oil producing countries, especially since a good portion of our oil comes from Canada, a peaceful ally and neighbor. Putting all of our energy eggs in the rare-earth monopoly would give China de facto control of our entire country. Scary.

RE: China
By Smilin on 1/27/2012 4:22:29 PM , Rating: 2
Think longer term. China operates by looking 50 years out (see development in Africa).

There are already new solar solutions that are not so reliant on rare earth. R&D is part of this. There are also old solutions that never required them, and energy solutions that don't require solar at all. Plus you get nutty stuff like the solar tower going up in Nevada I believe.

Energy will get expensive. Very. Billions more people will be using it. We have to invest. This is not something we want to play catch up in.

RE: China
By cmdrdredd on 1/28/12, Rating: 0
RE: China
By Smilin on 1/29/2012 1:06:28 AM , Rating: 2
You sir are emotional.

We have 'now' figured out. Eisenhower hwy system, robust oil industry, robust coal and nuclear power industry. State of the art ... For 1970.

I do not suggest we discard these. I suggest we think about the future. I suggest we start thinking in terms longer than a single election cycle.

Here, others are starting to pick up on the same clues about china..

"If you mod me down, I will become more insightful than you can possibly imagine." -- Slashdot

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