Beacon Power files for Chapter 11 bankruptcy; parallels drawn to Solyndra02. November 2011 | Industry & Suppliers, Markets & Trends | By: Becky Stuart
Flywheel energy storage solutions company, Beacon Power has filed for Chapter 11 bankruptcy. The company, which among other products, offers cloud mitigation for photovoltaic plants, received a Department of Energy (DOE) loan guarantee in April.
U.S.-based Beacon announced yesterday that despite its efforts to "produce the advanced flywheel systems necessary to operate our presently deployed and planned facilities", it has been operating at a loss.
Bill Capp, Beacon president and CEO did say, however, that the company's 20 megawatt (MW) Stephentown flywheel manufacturing facility will continue to operate. Currently, he said, it is running at full capacity. Meanwhile, in order to retain jobs, all employees are said to have taken a 20 percent pay cut.
The reasons for the poor business performance have been cited as "severely restricted" access to additional, required investments, due to the current turbulent economic and political markets, the DOE’s mandated loan conditions, and Beacon’s recent delisting notice from NASDAQ.
Consequently, the company filed for Chapter 11 bankruptcy on October 31. Capp said that it was a "necessary and prudent step that will allow us to operate our business without interruption."
He further explained, "We will use the Chapter 11 process to more rapidly restructure our overhead, pursue potential investors, and definitively resolve our loan obligations. In the meantime, our 20 MW flywheel plant in Stephentown is functioning at full capacity and it is our intention for it to remain operational."
Solyndra comparisons dismissed
Capp hit back at the media reports, which have drawn comparisons to the Solyndra bankruptcy, stating that while both companies have faced financial challenges, the "similarities end there".
For instance, he stated that while Solyndra received a USD$535 million DOE loan guarantee, Beacon was awarded just USD$43 million. Of that, he adds, only $39.5 million has been used. Furthermore, he said that while Solyndra immediately shut down its manufacturing plant, Beacon’s is still operational and has not lost any staff.
Additionally, he commented, "Beacon used the DOE funding to build a first of‐its‐kind flywheel energy storage plant that provides a critical electric power balancing service to help maintain a reliable grid. Solyndra built a facility to manufacture proprietary solar panels, the contents of which are being auctioned off."
While there is a "need for restructuring", Capp believes the company’s long-term prospects are "favorable". "Our goal in taking this action is to minimize job loss, and to continue to find ways to apply our innovative technology in the frequency regulation and energy storage markets," he concluded.
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