First Solyndra now Beacon, boy can the DOE Pick Them

Posted by PITHOCRATES - November 5th, 2011

Week in Review

Here we go again.  The DOE picks another loser (See Massachusetts energy firm that got stimulus grant, loan guarantee, seeks bankruptcy protection by Associated Press posted 10/31/2011 on The Washington Post).

A Massachusetts energy storage company that received a $24 million federal stimulus grant and a $43 million loan guarantee from the Department of Energy has filed for bankruptcy protection…

Beacon makes flywheel energy storage systems used to keep power frequency steady on electrical grids by absorbing excess power, then returning the energy when needed.

It said its long-term financial prospects are strong, but that efforts to build its business have been capital intensive, and that those costs have contributed to operating losses.

So what is a flywheel energy storage system?  Kind of like a battery in principle.  But instead of using chemical energy to store and release electricity it uses a flywheel and kinetic energy.  That is, spinning motion.

Flywheels spin.  They’re big, spin real fast and have very critical tolerances.  Like the jet engines on a plane.  Which typically are the most expensive parts of a plane.  Because they’re big, spin real fast and have very critical tolerances.  Which is why building these flywheels was “capital intensive.”  And apparently such a risky investment that the private market didn’t want to take the risk.  Which explains why it’s the taxpayer losing money here.  And not the private market.

DOE officials were quick to draw distinctions between Beacon and Solyndra Inc., a California solar energy company that sought bankruptcy protection in Delaware after receiving a half-billion-dollar loan guarantee from the Obama administration.

Solyndra, which is the subject of investigations by the FBI and congressional Republicans, ceased operations upon filing for bankruptcy in September and is planning to sell its manufacturing assets. Beacon, on the other hand, is seeking to reorganize and to continue operations at the Stephentown plant.

“That doesn’t mean there won’t be layoffs, but it is important to note that the plant we funded is going to continue providing a valuable service,” DOE spokesman Damien LaVera noted in an email.

So it’s bad.  But it’s not Solyndra bad.  And that’s good.  Because they haven’t gone out of business.  There’s no FBI investigation.  And no Obama fundraiser is at the center of the scandal.  Yet.  So it’s not Solyndra bad.

But it’s still early.


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