Beacon Power, a much-watched flywheel energy storage developer that last year received a $43 million loan guarantee from the Energy Department, on Sunday filed for bankruptcy to allow the company to operate its business “without interruption.”

The Tyngsboro, Mass.-based company was spun off from SatCon Technology Corp. in 1997 and went public in 2000. This June, it announced its 20-MW flywheel energy storage plant in Stephentown, N.Y., had achieved full capacity. In documents filed with Delaware’s bankruptcy court, the company said it had $72 million in assets and $47 million in debts.

The company had devoted “considerable resources and applied extensive effort to build a first‐tier team of engineering, technical and other employees, refine our technologies, perfect our patents and other intellectual property, obtain the regulatory and other approvals as required to derive appropriate revenues for our services, and produce the advanced flywheel systems necessary to operate our presently deployed and planned facilities,” Bill Capp, Beacon Power president and CEO, said in a statement on Tuesday.

“Those efforts have been very capital‐intensive over a several year period,” he added. “While great progress has been made in every area, each continues to be a work in process and requires additional investment.”

Capp said Beacon Power had determined revenues generated from operation of its Stephenstown facility were not sufficient to support business operation, and admitted the company had been operating at a loss. “In addition, the current uncertain economic and political climate, loan conditions mandated by the Department of Energy, as well as Beacon’s recent delisting notice from NASDAQ, have severely restricted access to additional investments through the equity markets.”

Filing Chapter 11 was therefore “a necessary and prudent step” that would allow the company to operate its business “without interruption,” Capp said. “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.”

Capp disputed reports in the media that had drawn similarities between Beacon Power and Solyndra. “Although both companies have faced financial challenges, the similarities end there,” he said.

Beacon had drawn only $39.5 million of the $43 million loan guarantee offered by the DOE. It used the DOE funding to build a “a first‐of‐its‐kind flywheel energy storage plant that provides a critical electric power balancing service to help maintain a reliable grid,” Capp said, whereas “Solyndra built a facility to manufacture proprietary solar panels, the contents of which are being auctioned off.”

Beacon’s flywheel plant was also fully operational and earning revenue with excellent performance—and Solyndra closed its doors “immediately,” he added. Beacon has also retained most of its employees, who have accepted a 20% pay reduction.

The company would also be the direct beneficiary of an order last week by the Federal Energy Regulatory Commission to increase payments for high-performance energy storage resources like flywheels, which perform frequency regulation services for the grid. “Solyndra was attempting to compete in a market of rapidly declining prices, increasingly driven by Chinese competition,” he said.

And of the larger differences, “Beacon Power is a public company whose financial reports are transparent and compliant with SEC and other government regulations,” Capp said. “Solyndra was a privately held company.”

Capp added that, despite the need for restructuring, “we believe that our long‐term prospects are favorable.”

Sources: POWERnews, Beacon Power