On October 30, 2011, Beacon Power Corp. (NCM: BCON) filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of Chapter 11 of the United States Bankruptcy Code.
Beacon Power, which specializes in high-energy, flywheel-based energy storage systems, opened for business in 2008 and established its headquarters in Woburn, Massachusetts, subsequent to a $5 million loan from Gov. Deval Patrick. It also has locations in Pennsylvania -- where it received at least another $5 million from Governor Tom Corbett’s Administration -- and New York, where it built a $69 million flywheel storage plant with a government-backed loan.
The filings, No. 11-13450, 11-13451 and 11-13452, were made by Stephentown Holding, LLC, and Stephentown Regulation Services, LLC, both wholly-owned subsidiaries of Beacon Power. The notices themselves are available through the Electronic Bankruptcy Noticing (EBN) Center for the United States Courts system.
Beacon Power is the second cleantech company which has been backed by the U.S. Department of Energy (DOE) via loan guarantees to fail this year.
The first was Solyndra, which declared bankruptcy under the same Chapter 11 provision on September 6 of this year. The solar company cited the cause of its failure rested in difficult times for the solar industry as a result of the Chinese government undercutting solar prices by selling cheap modules on an already glutted global market (a citation not supported by Solar Energy Industries Association president and CEO Rhone Resch, who calls recent and extensive expansion in the U.S. solar industry the primary driver of the reduction in solar module prices).
Solyndra, the poster child of the Obama Administration’s push for renewable energy innovation, got a $535 million loan guarantee in early 2009.
Conversely, Beacon, only received $43.5 million from the same Loan Guarantee Program, or IG-0849 (created by the Energy Policy Act of 2005, and expanded by the American Recovery and Reinvestment Act of 2009). However, it defaulted on its loan more rapidly, as the company was issued is loan guaranteed in August 2010. Although Beacon reportedly does intend to keep its Stephentown, N.Y., 20-megawatt storage facility operating and use it to generate income. The Hazle Township, Pennsylvania facility will be closed.
Beacon’s demise, according to one source, is the result of the low rates that the DOE forced it to charge utilities for its storage system. Another factor is the falling cost of natural gas, which can be used to easily and cheaply generate power via gas peaking plants on an as-needed basis, or long term, thus making power storage a costly enterprise.
Beacon’s commitment to reorganize, and a recent rule change by the Federal Energy Regulatory Commission (which will increase payments to energy storage providers), are being touted by the DOE as metrics which set Beacon apart from Solyndra.
Beacon first came to the DOE’s attention at the behest of the late Senator Edward Kennedy, and current Massachusetts Senator John Kerry, and was reportedly backed by proponents from both sides of the aisle, though an opposition faction of Republicans is currently pushing the Obama Administration to launch an investigation of the DOE loan guarantee process.
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