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Beacon Power bankrupt; had U.S. backing like Solyndra


By Tom Hals and Roberta Rampton

The bankruptcy comes about two months after Solyndra -- a solar panel
maker with a $535 million loan guarantee -- also filed for Chapter 11,
creating a political embarrassment for the administration of President
Barack Obama, which has championed the loans as a way to create "green
energy" jobs.

Beacon Power drew down $39 million of its government-guaranteed loan
to fund a portion of a $69 million, 20-megawatt flywheel energy
storage plant in Stephentown, New York.

There are several key differences between the two loans, an Energy
Department spokesman said on Sunday, noting the Beacon plant continues
to operate, unlike Solyndra, which shut down shortly before filing for
bankruptcy.

The Energy Department also had agreed to restructure Solyndra's debt
in a last-ditch effort to keep the company alive, a deal which put
taxpayers behind $75 million in private investment. But for the Beacon
project, the government loan is the first debt the company must pay,
the spokesman said.

But the new bankruptcy will stoke criticism from Republicans in the
House of Representatives who are investigating whether Obama campaign
donors who were investors in Solyndra played a role in decisions on
the loan -- allegations denied by the White House and Department of
Energy (DOE).

"This latest failure is a sharp reminder that DOE has fallen well
short of delivering the stimulus jobs that were promised, and now
taxpayers find themselves millions of more dollars in the hole," said
Cliff Stearns, a Florida Republican who is leading the House Energy
and Commerce Committee's probe.

Energy Secretary Steven Chu plans to testify to the committee at a
hearing slated for November 17.

'SMART GRID' TECHNOLOGY

The new bankruptcy comes on the heels of a White House announcement on
Friday that Wall Street veteran Herb Allison will conduct an
independent review of the Energy Department's loan portfolio during
the next 60 days and issue a public report on how to improve the
program.

The Energy Department has a loan portfolio of $35.9 billion -- $24.5
billion of which have been finalized. The portfolio includes "green
energy" loans like the one given to Solyndra and Beacon Power, as well
as loan guarantees for new nuclear plants and grants and loans for
technology used in energy-efficient vehicles.

Beacon Power developed new technology that allows its energy storage
plant to rapidly absorb electricity from New York's power grid when
demand drops, and inject energy back into the grid when demand
increases.

The technology is designed to help more solar and wind power -- which
is intermittent -- be used by power grids, which need stable power to
remain reliable.

The Federal Energy Regulatory Commission passed a new rule on October
20 requiring power markets to pay more for frequency regulation
services, such as those provided by Beacon -- a major victory for the
company.

The Tyngsboro, Massachusetts-based company was spun off of SatCon
Technology Corp in 1997 and went public in 2000. It said in documents
filed with Delaware's bankruptcy court that it had $72 million in
assets and $47 million in debts.

Beacon currently operates at a loss and its revenues are not enough to
support its operations, it said in court documents.

It blamed the bankruptcy on its inability to secure additional
investments due to the financing terms mandated by the Department of
Energy, its recent delisting by the Nasdaq stock market and the
current "political climate."

The loan guarantee for the project included "many protections for the
taxpayer," said DOE spokesman Damien LaVera, noting the department is
not directly exposed to Beacon's liabilities, has the operating plant
as collateral, as well as cash reserves held by the business.

The case is Beacon Power Corp, U.S. Bankruptcy Court, District of
Delaware, No. 11-13450.

(Reporting by Tom Hals in Wilmington, Delaware and Roberta Rampton in
Washington; Editing by Dale Hudson and Eric Walsh)