Published on February 8th, 2012 | by Breath on the Wind1
DOE to Recover 70% of Bankruptcy Loan
February 8th, 2012 by Breath on the Wind
The Department of Energy (DOE) has been under fire with several investigations for loans to companies that have later filed bankruptcy. The most infamous and largest is with Solyndra, but Ener1 and Beacon Power also received loans. Of these, the situation at Beacon Power presents a bit of a special case. Beacon Power was in the business of providing an energy storage service to our electric grid. Specifically, it had an operating plant in Stephenburg, NY that contained 200 flywheels. Energy can be taken from the grid or added to it in milliseconds using flywheels. A new buyer has now agreed to repay 70% of the DOE loan received by Beacon Power.
Recent regulatory changes will adjust payments in the frequency market to allow payment based upon response time. A gas-fired peaking power plant can come on line to boost grid power (and frequency, which is a test of power levels) within about 15 minutes. A battery backup system can take less than a minute. Flywheels have the shortest response time for the frequency regulation market. In the future, income for frequency regulation by flywheels is likely to at least double.
But this comes too late for Beacon Power. Several flywheel failures at the Stephentown plant created some bad press. Income levels were not enough and Beacon Power seemed to be taking its DOE loan along with flywheel technology and company into the doubt of bankruptcy court. A Monday press release, however, reveals that the private equity firm Rockland Capital will buy the Stephentown plant and most of the company’s assets for $30.5 million in cash, a promissory note, and “additional guarantees and funding obligations to DOE of $6.6 million,”
Beacon Power LLC
The agreement is pending approval but contemplates “a new private company named Beacon Power LLC, wholly owned by Rockland, which will rehire a majority of the current Beacon staff into the new company.” The contemplated new plant in Pennsylvania appears to also be going forward with the new company.
If the DOE is looking good after this sale, the technology is moving forward with the construction of a new plant, and the company is stronger than ever in private hands, who loses? Well, other creditors and stockholders will not be along for the new Beacon Power wave into the future.
Photo Credit: Jeff Sandquist
Buy a cool T-shirt or mug in the CleanTechnica store!
Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech daily newsletter or weekly newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.