Beacon Power follows Solyndra into bankruptcy

posted at 8:49 am on November 18, 2011 by Ed Morrissey

At the end of last month, I wrote about Beacon Power, a green-tech company that received over a hundred million dollars in taxpayer-backed credit but who teetered on the edge of bankruptcy.  Yesterday, Beacon tipped over, filing for protection from its creditors — and potentially taking $43 million in taxpayer dollars with it:

Beacon Power, a Massachusetts-based company that won praise from renewable power activists and loan guarantees from the federal government, has filed for bankruptcy, potentially leaving taxpayers on the hook for $43 million.

The company, which promised to build storage devices for intermittent power produced by wind and solar power facilities, was never able to attract investors. Coming on the heels of the Solyndra bankruptcy and ensuing scandal, the Beacon Power bankruptcy has a growing number of people calling for an end to federal loan guarantees for risky alternative energy start-ups.

Never is the operative word.  By the time the Obama administration handed Beacon parent company EnerDel a huge line of credit, its share price had fallen more than half from its peak two years earlier.  Three weeks ago, it was trading at eleven cents a share.  According to the report from the Heartlander, the share tumble was worse when put in wider perspective:

According to published reports, Beacon’s shares traded for $47 in 2005 but fell to $3.44 in February 2011 and less than $1 a few months later. The company was cautioned by Nasdaq it was in danger of losing its listing. In late October, the price per share fell to just under 11 cents, leaving the company with a market value of $3 million.

Thus far, no connections to political donors or bundlers have been found between EnerDel and the Obama administration, which makes it different from the Solyndra scandal.  The money loss for taxpayers is much smaller than with Solyndra as well, but the carelessness of the Obama administration’s investment strategy is just as apparent with Beacon’s collapse.  It shows the folly of government investing taxpayer dollars in companies that investors have already fled.

The Pioneer Institute takes that lesson from this collapse:

“We take a pretty dim view of government getting too deeply involved in private companies and picking winners and losers,” said Steve Poftak, research director for the Massachusetts-based Pioneer Institute. “When they start to rend away from support at the early stage of development—at the science and research stage—and get into the balance sheets of companies, that’s [crossing the line].”

And it’s a recipe for failure, too.  Congress should start taking a look at how the DoE chose Beacon as a recipient.

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Money that buys Democrat votes is not wasted. Not to Democrats. It’s often mislabeled, but it’s not wasted.

RBMN on November 18, 2011 at 8:58 AM

Oh “Beacon” Power. I thought this was a thread about harnessing energy from my favorite pork breakfast product.

My family is giving up I’m afraid on trying to outfit the new home with solar and photovoltaic cells. The products just don’t seem to be there.

hawkdriver on November 18, 2011 at 8:59 AM

John Kerry connection

Key West Reader on November 18, 2011 at 9:00 AM

Unexpectedly!

Washington Nearsider on November 18, 2011 at 9:03 AM

I’m sure it is a total coincidence that 80% of the loans went to democrat party contributors.

Vashta.Nerada on November 18, 2011 at 9:04 AM

This is a disaster. This is what happens when the federal government gets in bed with corporations and tries to pick winners and losers. We all know that this form of fascism is only cool when done on the state level.

/Mittens

mankai on November 18, 2011 at 9:05 AM

The communists in Washington, serving in this socialist administration, did this intentionally. They WANT this economy to collapse… this is just piece of their plan.

And, it’s working splendidly.

stenwin77 on November 18, 2011 at 9:06 AM

“picking winners and losers”

forest on November 18, 2011 at 9:06 AM

Bacon Power??!?!

Abby Adams on November 18, 2011 at 9:07 AM

The company, which promised to build storage devices for intermittent power produced by wind and solar power facilities, was never able to attract investors.

You mean to tell me that of all those greedy banks and fat cats at Wall Street, not one would pony up a few million to invest in such a worthy cause? Is it possible that every private sector investor in the country didn’t even see this as a viable long-term investment? This is a classic example of the DOE picking winners a losers at the taxpayer’s expense.

As United States Secretary of Energy, Dr. Steven Chu is charged with helping implement President Obama’s ambitious agenda to invest in clean energy, reduce our dependence on foreign oil, address the global climate crisis, and create millions of new jobs.

How much longer do we have to “Chu” on Obama’s ambitious agenda?

Rovin on November 18, 2011 at 9:09 AM

The corruption is just so blatant. It seems to me that the O administration is intent on sucking the public money into their own private coffers as they shut down this country.
I am sure that the OWSers will get on this right away. That is if we can stand their smell.

bloggless on November 18, 2011 at 9:10 AM

“Projects like this will bring significant economic, environmental and efficiency benefits to Pennsylvania’s power grid,” said Rep. Lou Barletta, R-Pa., in August. “It will also create new jobs and boost the local economy.”

I hate this sort of ignorant thinking.

When you create FAKE jobs, you end up losing those jobs and you’re left with debt. When are people going to wake up and realize that the government can’t “create” jobs that have no basis in market reality?

We finally have a GOP legislature her in NC after 118 years of Dem control… and one of the first things the new GOP Senate kvetches about is the governor’s decision not to buy 28 new school buses from a company in Thomasville because of budget contsraints… he went on the attack because “we need jobs!”

I wrote to idiot to remind him that it’s not the government’s job to “create” jobs.

mankai on November 18, 2011 at 9:12 AM

Spot on Rbmn!

cmsinaz on November 18, 2011 at 9:12 AM

Bacon Power??!?!

Abby Adams on November 18, 2011 at 9:07 AM

Sadly, no.

If it was Bacon power they wouldn’t have run out of investors in the first place!

wearyman on November 18, 2011 at 9:16 AM

This is not a case of government picking the winners and the losers. If this company was a winner, they would have had no problem getting money from private investors. So we’re left with the government picking the losers.

Of course, the government officials are not wasting their own money (“our own money, are you serious?”) they’re wasting yours.

PackerBronco on November 18, 2011 at 9:17 AM

Marsha Blackburn at the recent DOE hearings: “Let me remind you that this hearing is not about solar power, it’s about the possible abuse of executive power” (paraphrased)

Rovin on November 18, 2011 at 9:17 AM

First Bank of Obama disregards sales and revenues.
Solyndra had very low sales volume. If a bank and the equities market say a company stick, it is fragrant to First bank Of Obama. The Big Green Sugar Daddy in the white house.

seven on November 18, 2011 at 9:18 AM

Anyone else noticed this……:

These “green energy” companies are all declaring bankruptcy – all about one year before the 2012 election.

Where did all that money go? Has anyone traced it to see if it was all really spent on the business? Checked the books? Accounting 101, anyone?

Not that I’m saying that they pulled a Corzine, or Enron, per se.

Rather, did these Obama donors/green boondoggles put large pockets of that “stimulus” money away, into some off-shore accounts or other “safe” places?

And, is that now being donated to the Democrat Party? Who is keeping track??!!?? Yeah, yeah, Sheriff Joe, you say….well, that’s my point!

Rush has said for years that the “Porkulus” was a giant money laundering scheme. He specifically points out the union pension funds for public unions/teachers angle. Sounds like this was a HUGE part of that scheme, too. The DoE knew these companies were going bankrupt. This is just too cozy and convenient, IMHO.

Anyone else notice the timing, and the silence about all these cronies going bankrupt right before the election?!

Always question the timing. Always.

Stinks like a dead fish to me.

DINORight on November 18, 2011 at 9:19 AM

Ed, they aren’t a solar-tech company at all.

The build fly-wheels that were supposed to help grid operators deal with alternative energy output variances.

blink on November 18, 2011 at 9:05 AM

Fixed. They do work with solar-power technology, but not exclusively with solar power, so you are correct.

Ed Morrissey on November 18, 2011 at 9:19 AM

What ever happened with the Light Squared deal? Anyway the entire administration need to BE IN JAIL.

Everyone from Zero on down is a CROOK.

dogsoldier on November 18, 2011 at 9:20 AM

Which failed green company associated with Robert Kennedy Jr with ties to Chavez also grabbed taxpayer dollars in this abuse of power boondoggle?

onlineanalyst on November 18, 2011 at 9:24 AM

I have heard on The Five that the U.S. has a strong solar panel industry.

Cindy Munford on November 18, 2011 at 9:25 AM

They said if I voted for McCain…well, you know.

NotCoach on November 18, 2011 at 9:25 AM

Regardless of what this companies specific production was, this article highlights the looming problem for alternative/renewable fuels: storage. They’ll never replace oil until someone can figure out how to store and transport the energy generated for future use.

A little detail overlooked by these enviro nuts – like Obama.

BKeyser on November 18, 2011 at 9:26 AM

I find it interesting that elected officials are so lousy at investing tax-payer dollars, but when they invest their own money- winning!

parteagirl on November 18, 2011 at 9:26 AM

What ever happened with the Light Squared deal? Anyway the entire administration need to BE IN JAIL.

Everyone from Zero on down is a CROOK.

dogsoldier on November 18, 2011 at 9:20 AM

Obama has no shame. Mass pardons all the way round (including himself) when he leaves office. I am convinced he will do this.

NotCoach on November 18, 2011 at 9:27 AM

DINORight on November 18, 2011 at 9:19 AM

You may be onto something, but I have a question: why sully the reputations of green energy companies? Why not pick some other hated industry to laundry their money through?

parteagirl on November 18, 2011 at 9:31 AM

Bacon Power! Harnessing the power of Bacon!!! We should invest a lot more money into this company!

Oh wait, it say Beacon. I say cut funding, call the debts, and let them rot. Then throw them in prison for getting me excited about bacon power.

jeffn21 on November 18, 2011 at 9:39 AM

Glad I am not the only one who read, and then re-read, the headline as “Bacon Power”

Nathan_OH on November 18, 2011 at 9:59 AM

Also, in the running, is the penchant for both Dems and Pubbies to pester Pentagon brass to build equipment and munitions that the services do NOT want – only to save defense jobs for their constituents. If they want to save defense jobs ask those contractors to come up with something the Pentagon really needs!

Bob in VA on November 18, 2011 at 10:04 AM

Remember that Solyndra was the very first company to get money under this loan program and there are many more out there that might follow in their footsteps.

https://lpo.energy.gov/?page_id=45

JeffinSac on November 18, 2011 at 10:05 AM

Barry’s administration is on the type of winning streak that Caesar’s Palace loves to see. Keep up the truly excellent work, Mr. President.

cyclown on November 18, 2011 at 10:05 AM

If Beacon’s shares traded for $47 in 2005, the company had been losing money for at least three years before Obama became President. This wasn’t a government stimulus of a startup company–it was a government bailout for a known failure!

Steve Z on November 18, 2011 at 10:06 AM

Has the dear leader gotten his $B dollars in campaign donations yet? No? Expect more bankruptcies to occur.

Kissmygrits on November 18, 2011 at 10:09 AM

I find it interesting that elected officials are so lousy at investing tax-payer dollars, but when they invest their own money- winning!

parteagirl on November 18, 2011 at 9:26 AM

thread winner!

tinkerthinker on November 18, 2011 at 10:18 AM

President Plutonium works his anti-midas touch again!

Yea and verily is this man a corporate slayer… his friends pester him for cash for their failing companies and they get the bailout, the company fails, the workers get let go and the US taxpayer gets the shaft.

ajacksonian on November 18, 2011 at 10:20 AM

You may be onto something, but I have a question: why sully the reputations of green energy companies? Why not pick some other hated industry to laundry their money through?

parteagirl on November 18, 2011 at 9:31 AM

Because the democrat base would not stand for giving stimulus money to evil corporations, only ‘good’ ones.

Vashta.Nerada on November 18, 2011 at 10:25 AM

Bacon Power would never fail.

Rogue Traveler on November 18, 2011 at 10:27 AM

Congress should start taking a look at how the DoE chose Beacon as a recipient.

I’m pretty sure that Stevie Chu will say that he was ‘unaware’ of this companies failings.

GarandFan on November 18, 2011 at 10:33 AM

In my vision of utopia, everyone would be driving around in 1971 Cadillacs.

ardenenoch on November 18, 2011 at 10:57 AM

The company, which promised to build storage devices for intermittent power produced by wind and solar power facilities, was never able to attract investors.

I would suggest the opposite. That company had at least 310 million investors.

BobMbx on November 18, 2011 at 11:22 AM

I find it interesting that elected officials are so lousy at investing tax-payer dollars, but when they invest their own money- winning!

parteagirl on November 18, 2011 at 9:26 AM

Indeed.

I’m pretty sure the Democratic Senators put together have a net worth that would cover Solyndra et. al.

How about if everyone who votes “yes” on these payment authorizations is required to secure the loan from their personal assets. They can use taxpayer money, but the guarantee is that any loss will be covered from the pockets of the members of congress who authorized the payout. Any profit goes to pay off the deficit, directly.

TexasDan on November 18, 2011 at 11:31 AM

RBMN on November 18, 2011 at 8:58 AM

DINORight on November 18, 2011 at 9:19 AM

These two got the handle on it.

listens2glenn on November 18, 2011 at 12:07 PM

Thanks for posting this, Ed. I was unaware of this one.

LegendHasIt on November 18, 2011 at 12:31 PM

I would suggest the opposite. That company had at least 310 million investors.

BobMbx on November 18, 2011 at 11:22 AM

Ooooooooh,. . . ouch. : O

listens2glenn on November 18, 2011 at 12:36 PM

When you create FAKE jobs, you end up losing those jobs and you’re left with debt. When are people going to wake up and realize that the government can’t “create” jobs that have no basis in market reality?

mankai on November 18, 2011 at 9:12 AM

Just ask Spain.

scituate_tgr on November 18, 2011 at 1:29 PM

And then there’s BrightSource, which–with $1.6 billion in loan guarantees–makes Solyndra AND Beacon look like chump change.

https://lpo.energy.gov/?projects=brightsource-energy-inc

http://www.powerlineblog.com/archives/2011/11/another-obama-scandal-in-the-making.php

Owen Glendower on November 18, 2011 at 2:28 PM