Another Bankruptcy Black Eye for the DOE
Oh no! Alert the conspiracy theorists -- another company that received a Department of Energy loan guarantee has filed for bankruptcy. Beacon Power, a company hoping to make flywheels into energy-storage gold threw in the towel Sunday.
Of course, this follows the highly publicized bankruptcy of Solyndra, the solar manufacturer that built a gaudy manufacturing plant on an unstable business. Beacon's loss won't grab quite as much attention, but the government did throw in $24 million in federal stimulus grant money and $43 million in loan guarantees.
Next up: DOE loans on perpetual motion, cold fusion are in trouble
I've written extensively about the difference between manufacturing loan guarantees like this one and power plant generation loan guarantees that SunPower (NAS: SPWRA) and First Solar (NAS: FSLR) recently closed on. What's troubling to point out is the Department of Energy's incredible incompetence in picking manufacturers that had a chance at succeeding.
Solyndra's technology had very little chance when stacked against falling solar costs for LDK Solar (NYS: LDK) , JA Solar (NAS: JASO) , and a slew of other competitors. Beacon was trying to build a market in energy storage on technology I would say is suspect at best. And competitors in energy storage like Ener1 and A123 Systems (NAS: AONE) don't provide a dangerous product that requires a vacuum chamber to make sure the flywheel doesn't explode, which it has in the past.
Who is next?
If we assume the DOE is great at investing in losers, who is next? Ener1 is an easy call and probably won't last much longer. A123 Systems might not be far behind unless demand picks up quickly for the company's batteries. And Tesla Motors (NAS: TSLA) should at least get a mention, with losses expected to continue as production ramps up. Tesla isn't near bankruptcy yet and serves an affluent market that the others would dream of selling to, but the DOE ties are there -- and so are the losses.
At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.