Second Govt-backed Renewable Energy Firm Fails
Beacon Power, a company that makes energy storage devices used to help the power grid become more efficient, filed for bankruptcy protection over the weekend, becoming the second firm backed by the federal government to fail after the much-publicized failure of solar company Solyndra earlier in the year. Both companies received loan guarantees from the federal government last year, loans that will now likely cost US taxpayers half a billion dollars.
Solyndra was provided with a loan guarantee of $535 million under a program created by Bush and extended by Obama to create jobs in areas like renewable energy, nuclear power and advanced automobile technologies. Beacon only received $43 million under the program, but the company’s failure should intensify the investigation into Solyndra’s bankruptcy even if a separate investigation isn’t launched into Beacon. Both companies were funded under a program that spent $40 billion in taxpayer money overall.
Despite both companies being funded under the same program, the DOE noted Monday afternoon that there are several key differences between Solyndra’s bankruptcy and Beacon’s. A spokesman revealed that while Solyndra ceased all operations on the same day it filed bankruptcy, effectively cutting off the flow of revenue, Beacon still has operating facilities that will be able to continue producing revenue through contracts already in place. In addition, Beacon also has cash reserves, to which the government is entitled, whereas Solyndra was literally bankrupt.
Beacon Power manufactures an advanced flywheel electric storage device used to back up power grids during peak usage spikes. The devices kick in when the grids need the extra power, averting potential overload-caused blackouts. The flywheels can be used in lieu of building extra power plants that are only used when energy consumption is at its highest. Beacon’s facility in New York is capable of storing 20 megawatts of power, or about one-fiftieth of a nuclear reactor’s output.
Beacon’s revenue came under pressure because of government regulations limiting how much the its customers, the utility companies, were allowed to pay for Beacon’s services, and the allowed rate in effect led to Beacon’s demise. The ultra-low price of natural gas also limited the firm’s profitability. The Federal Energy Regulatory Commission recently raised the amount utilities could pay, but the change has yet to go into effect.