Earlier this year came reports that the publicly hated Troubled Asset Relief Program (the TARP) was going to generate some $24 billion in profits for the Treasury Department.  Some immediately challenged the math on how that profit was tallied up, but the wave of bankruptcies in DOE-backed loan guarantees is currently creating a dilemma that only heats up the debate between environmental issues and capitalism.  With the exception of American International Group, Inc. (NYSE: AIG), the “too big to fail” institutions have by and large paid Uncle Sam back what was borrowed under the TARP.

The DOE website shows some $35.9 billion in total loans over nearly 40 projects since 2009 which were listed as being able to create some 60,000 jobs, and which could provide enough clean electricity to power three-million homes with a claim of saving some 300-million gallons of gasoline each year.

The problem is that the half-billion dollar loan to Solyndra in California was the worst investment made in alternative energy.  Other bankruptcies from Evergreen Solar and Beacon Power Corporation (NASDAQ: BCON) have only added more public scrutiny over how financially feasible many alternative energy companies are.

Prologis, Inc. (NYSE: PLD) may be an unlikely “green company” in office warehouse operations, but it was adding solar panels to the roofs of its warehouses throughout most of the nation where it could generate power for use or resale back into the grid. These projects appear all over the DOE loan guarantee map of the United States.

Ford Motor Co. (NYSE: F) is supposed to be the most publicly appreciated car company in America because it did not take any government bailouts while General Motors Corp. (NYSE: GM) still has Uncle Sam owning a large part of the company.  Under the ATVM loan guarantees seen, Ford was listed on the DOE program site as having had just over $5.9 billion from a 2009 guarantee and Tesla Motors, Inc. (NASDAQ: TSLA) was given part of an ATVM loan program in early 2010, .

US Geothermal Inc. (AMEX: HTM) is another troubled sub-$1.00 stock and it has received $97 million in DOE loan guarantees.  It was as recently as the end of this August that the company noted the first funding drawdown under the $96.8-million loan guarantee to construct its planned 23-megawatt-net power plant at Neal Hot Springs in Eastern Oregon.

Others in Solar deals which have either directly received loan guarantees or which were shown to be working in the projects over the last year or so were SunPower Corporation (NASDAQ: SPWRA) and First Solar Inc. (NASDAQ: FSLR).  First Solar noted at the end of September that the Topaz Solar Farm project will not meet the statutory deadline to receive a federal loan guarantee from the DOE.

Bank of America Corporation (NYSE: BAC) does not have any of that TARP money in it, and its shares are the worst performing by far of all of the money-center banks deemed as “too big to fail” with a drop of 56% from its 52-week high.  First Solar is down about 74% from its 52-week high and SunPower is down about 60% from its 52-week high.  Those losses are quite common throughout almost the entire solar and alternative energy sector.

The U.S. Green Building Council touts on its website that a study from Booz Allen Hamilton was released by USGBC in November 2009 predicting that green building would support or create 7.9 million jobs between 2009 and 2013 and would contribute $554 billion to the gross domestic product.  That seems a bit impossible now… Doesn’t it?

It has been sad to see and it is nearly painful to say, but Uncle Sam has at least so far proven to be a better fiduciary of investing in the banking sector than it has in picking alternative energy companies.  Maybe that will change in the quarters ahead, or maybe not.  We are talking about the government after all.

JON C. OGG

It was just on April 28 of this year that we noted, “Beacon Power makes a flywheel device designed to help regulate frequency services on the US power grid. The company is nearing completion of its first 20-megawatt flywheel storage plant in New York state, and has just received approval from the US Department of Energy to draw up to 95% of a $24 million federal grant to begin work on its second plant in Pennsylvania.”

Now Beacon is bankrupt.  The company still has more assets than liabilities (listed as $72 million versus $47 million), but it is burning cash at a rate that cannot be met by revenues and its operating losses are eating it alive.  The company had received some $43 million loan guarantees under the Department of Energy.

Beacon is now looking like it may be in the same boat as Evergreen Solar and Solyndra.  Great use of our taxpayer assets.  At least the banks have mostly paid us back.

To show just how bad things are, Beacon had already been given a NASDAQ delisting notice as it was seeking financing.  Now shares are down 73% at $0.12 and the new 52-week range is $0.11 to $3.50.  The news flow is not yet focusing on another government-backed bankruptcy in alternative energy.

Do you know how to make a small fortune?  Start with a large fortune and bet heavily on a risky money-losing company in alternative energy.

JON C. OGG

Beacon Power (NASDAQ: BCON), backed by U.S. funds, goes bankrupt. (Reuters)

Young and well-educated Greeks begin to leave the country. (Reuters)

Panasonic (NYSE: PC) cuts its annual earnings forecast. (Reuters)

MF Global’s (NYSE: MF) holding company may go bankrupt, with some assets sold to Interactive Brokers Group (NASDAQ: IBKR). (Reuters)

Many EU-based businesses have cut earnings forecasts as trouble in the region hurts the economy. (WSJ)

The U.S. may not sell more AIG (NYSE: AIG) stock until the share price rises. (WSJ)

Wells Fargo (NYSE: WFC) will not charge debit card fees similar to Bank of America’s (NYSE: BAC). (WSJ)

Gamestop (NYSE: GME) to sell PCs. (WSJ)

Google (NASDAQ: GOOG) has a new product to compete with Groupon. (WSJ)

Natural gas shale drilling  in Pennsylvania  prompts fight over who owns rights and land. (WSJ)

Sentier Research reports that American’s do not feel the recession is over. (WSJ)

Harley-Davidson (NYSE: HOG) increases marketing messages to women. (WSJ)

Porsche posts strong earnings. (WSJ)

Aol (NYSE: AOL) wants to catch the balance of mobile portal products creators. (WSJ)

Honeywell (NYSE: HON) throws off substantial cash but is unlikely to add new employees. (WSJ)

Federal Reserve members are at odds about whether the central bank should do more to help the economy. (WSJ)

Cable companies continue to block use of web TV. (WSJ)

Nebraska may try to block the construction of a huge pipeline that would run from Canada to the southern U.S. (WSJ)

Large corporations to lobby the G20 for more unity on economic issues. (FT)

Microsoft (NASDAQ: MSFT) will begin to use Xbox Kinect to deliver more than game services. New software may create medical devices. (FT)

Italian Prime Minister Silvio Berlusconi says he can set budget cuts to balance Italy’s books and that new elections are not necessary. (Bloomberg)

Honda’s (NYSE: HMC) numbers miss forecasts and it eliminates earnings estimates. (Bloomberg)

Douglas A. McIntyre

Normally a merger between a couple of giant power generators wouldn’t be considered as alt energy news, but this one is a bit different. Exelon, the nation’s largest nuclear power generator, is paying $7.9 billion in stock to acquire Constellation Energy, which generates about 21% of its 12,000-megawatt capacity from nuclear and renewable sources.

Both companies own coal-fired plants as well. Exelon generates about 5% of its more than 25,000-megawatt capacity from coal. Constellation generates 23% of its capacity from coal. Combined, of the approximately 35,000-megawatt capacity, about 11% will come from coal-fired generation. Last August, Exelon bought 735 megawatts of wind generation from Deere & Co. (NYSE: DE).

The merged company’s generation capacity will comprise about 55% nuclear, 24% natural gas, 8% renewable and hydro, and the remaining 13% coal- and oil-fired. Exelon has also received 20-year extensions on two of its nuclear power plants, one of which is Three-Mile Island.

As part of the deal, the merged company has agreed to invest more than $250 million in various projects in Maryland, home of Constellation. Part of the deal includes a promise not to cut jobs at Baltimore Gas & Electric for at least two years after the transaction closes. The merger is subject to regulatory and shareholder approvals, and is expected to close in early 2012.

Solar PV maker Evergreen Solar has had a tough year. The stock’s 52-week high was 52 weeks ago, while the 52-week low was posted just 5 weeks ago. Evergreen’s shares are down more than -25% today, to $1.52 about half an hour after the market opened today. They had fallen to $1.37 before bouncing back. The 52-week range is $1.18-$7.14.

Evergreen announced some preliminary data on its first quarter results prior to its scheduled May 2nd earnings release. The company said that first quarter shipments totaled just 18 megawatts at an average selling price of $1.86/watt. In the same period a year ago the company sold 47 megawatts at an average price of $1.90. That’s a double whammy of bad news.

Then came the triple whammy — Evergreen is running short of cash. As the company’s CEO put it, “Our near term liquidity has been negatively impacted [by lower sales] and may require us to secure additional sources of cash sooner than expected.”

Part of the company’s strategy is to restructure its debt “in order to significantly deleverage” and get into a position to secure additional financing. How, exactly, does a company with just $33 million in the bank make a dent in some $427 million in long-term debt?

Back when Evergreen closed its plant in Devens, Massachusetts, the company’s CEO noted that low wages at Evergreen’s Chinese plant were not the primary reason for manufacturing in China. The main reason is access to cheap loans for companies that build factories in China.

In a different world, Evergreen would probably be shutting down about now, or at least issuing a “going concern” notice. That’s not happening because the company might be able to get some cheap money. We should know the answer pretty soon.

Beacon Power makes a flywheel device designed to help regulate frequency services on the US power grid. The company is nearing completion of its first 20-megawatt flywheel storage plant in New York state, and has just received approval from the US Department of Energy to draw up to 95% of a $24 million federal grant to begin work on its second plant in Pennsylvania.

The company has also filed a shelf registration with the US SEC for up to $100 million. The company said it would use the registration to build merchant plants, manufacture more flywheel storage systems, and “funding ongoing operations.”

That last is probably the reason for the stock’s faltering price today. Beacon’s shares are trading down more than -2%, at $1.68, near the bottom of its 52-week range of $1.51-$5.00.

Paul Ausick

The gross proceeds from this public offering to Beacon are expected to be up to $15 million if you include the initial proceeds from the sale of the preferred stock and up to $5 million from the (possible) exercise of the warrants to purchase preferred stock included in the units.

Each unit consists of one share of Beacon’s newly designated Series B convertible preferred stock, with an initial stated value of $1,000 per share; one warrant to purchase an additional 0.5 of a share of preferred stock for an exercise price of $1,000 per share of preferred stock; and one warrant to purchase 4,458.27 shares of common stock at an exercise price of $0.25234 per share of common stock. The shares of preferred stock, the preferred stock warrants and the common stock warrants are immediately separable and will be issued separately. The preferred stock is convertible by the holders into common stock at an initial conversion price of $0.25234 per share, subject to adjustment.

The capital raised from the offering will be used for general corporate purposes and ongoing working capital requirements.

Beacon Power closed at only $0.26 yesterday and shares are now indicated down around $0.21.  The 52-week trading range is $0.18 to $0.54 and the average volume is only just over 1.5 million shares per day.

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JON C. OGG

 
Leaving aside the cost issues for now, let’s look at the intermittency and infrastructure issues. If there’s a primary goal for renewable energy it’s a method for storing the energy generated until it is needed. It’s best, though, not to think of this as a continuous, or baseload, solution. Rather, it is a regulation service that can be used to meet drops in supply or spikes in demand. Such a solution requires that an energy storage solution be able to respond instantly to requests for power.

 
Currently, gas-fired plants, and some coal-fired plants, meet this unusual demand by throttling up generation. Large batteries though could provide the service more quickly and with more flexibility than traditional power plants, and at less impact to the entire grid.
AES Corp. (NYSE: AES) and A123 Systems, Inc. (NASDAQ: AONE) have built a 12-megawatt lithium-ion battery system in Chile that helps a system operator meet fluctuating demand. A similar 2-megawatt system is on-line in southern California at one of AES’s power plants. The two companies are currently working on a similar 20-megawatt system in New York state.

 
Another provider of grid-level storage is Beacon Power Corp. (NASDAQ: BCON), which is building a 20-megawatt energy storage system using its patented flywheel storage technology, also in upstate New York. The plant is expected be operational by the end of this year.

 
A panel of the American Physical Association has just issued a report on integrating renewable generation on the grid  that recommends that the US Department of Energy develop a strategy of grid-level energy storage combined with a review of different battery chemistries and increased R&D funding.

 
The report also notes that transmission lines need to be revamped using superconducting high-voltage, direct current lines. That is good news for American Superconductor Corp. (NASDAQ: AMSC), which has just sold some 1,800 miles of its superconducting cable to South Korea.

 
Finally, the report recommends that the Federal Energy Regulatory Commission and the North American Electricity Reliability Corporation develop a business case that “captures the full value of renewable generation and electricity storage in the context of transmission and distribution.” In other words, this is going to cost a bundle, but it’s worth the money.

 
Paul Ausick

The company’s certificate of incorporation allows it to issue an aggregate of 400,000,000 shares of common stock and 10,000,000 shares of preferred stock, both with a par value $0.01 per share.  The company does have warrants issued from prior financings, so the fully diluted terms may be different than the nominal amounts listed.  We have the current market cap listed as almost $85 million based upon a $0.70 share price.

Beacon is one of the flywheel technology players.  It makes flywheel-based energy storage systems that provide frequency regulation and other energy solutions for the worldwide electricity grid at competitive costs.  It also sells individual and large-scale systems and will seek to market other cost-effective applications for its flywheel systems.

JON C. OGG
SEPTEMBER 1, 2009

The U.S. Treasury’s Federal Financing Bank is funding the loan and will provide debt financing for about $43 million of the estimated $69 million total project cost.  The company noted that roughly $50 million of this total cost is direct equipment and facility costs.

Beacon’s equity contribution of roughly $26 million will be provided by a combination of cash, in-kind assets, and other eligible project costs. Before the loan can be closed, the DOE’s conditional commitment is subject to negotiation and completion of a number of contracts and conditions.

The company also noted that out of 143 pre-application submissions in late 2007, Beacon’s 20 MW energy storage plant was one of just 16 projects invited to submit a full application for loan guarantee consideration. Of these 16 projects, Beacon’s was the only one selected in the “Electricity Delivery and Energy Reliability” category.

Beacon shares are up almost 20% now at $0.94 on over 3.1 million shares (1.5-times total daily volume).  Its 52-week range is $0.32 to $1.97 and its new post-news market cap is $108 million.

Jon C. Ogg
July 2, 2009

CAPSTONE TURBINE CORP. (NASDAQ: CPST) is being booted off as an “Energy” sector stock.  This microturbines player is a “less-dirty” power play, but stock offerings and a lack of sustained growth to get to profitability has taken the oomph away from this stock. But this one still has a deep retail base of stock owners and trades millions of shares per day.

FINISAR Corporation (NASDAQ: FNSR) is being kicked out as a “Technology” sector stock from the Russell 3000.  This high-speed data communication subsystems player just never took off as many hoped it would.  But it still has a cult stock following as it trades close to 2 million shares per day.  At $0.70, its market cap is $337 million and its 52-week range is $0.21 to $1.68.  During the tech bubble in 2000 this was a $20 to $50 stock.

Rick’s Cabaret International Inc. (NASDAQ: RICK) is being booted as a “Consumer Discretionary” sector member of the Russell 3000.  Rick’s may be the ultimate consumer discretionary example there is as it owns topless bars, i.e. gentlemen clubs.  The company is still profitable overall, but even at $6.17 per share its market cap is $57 million and its 52-week range is $2.44 to $21.98.

SIRIUS XM RADIO INC. (NASDAQ: SIRI) needs very little explanation.  It has gone to the basement and is being removed as a “Consumer Discretionary” stock in the Russell 3000.  Its market cap is north of $1 billion still, but we don’t even presume to know what turnaround would be required for it to get re-added.  It seems that the reverse split isn’t going to help matters, at least not as the Index Team at Russell is concerned.

TheStreet.com, Inc. (NASDAQ: TSCM) is being booted off the Russell 3000 as a “financial services” sector stock.  If you know Jim Cramer you know TheStreet.com.  At $2.22 it has a $67.9 million market cap and the 52-week range is $1.69 to $7.34.  The decline in CPMs for ad rates and the major purge of subscriber newsletter operations has knocked this stock down close to a net cash value if you can believe it.

Uranium Resources, Inc. (NASDAQ: URRE) is being booted off as a “Materials & Processing” sector stock in the Russell 3000.  This was a more popular stock when uranium prices were through the roof.  At $1.42 it has a $80 million market cap and its 52-week range is $0.36 to $4.70.  If uranium ever makes a huge comeback, this  company might get re-added.

VONAGE HOLDINGS CORP. (NYSE: VG) is being deleted from the “Utilities” sector from the Russell 3000.  The company stock has fallen to under $1.00 and is now even under $0.43 since the last rebalance.  It would have to rise another 50% or 100% to remain in the index.  This one has thousands and thousands of stockholders and millions of Vonage users.  But its share price dictates all, and you know the vote.  The 52-week range is $0.31 to $1.96.

Again, there are two more opportunities as the other Russell index changes will be amended today and again next Friday.  It is always possible that some of these will change.

Jon C. Ogg
June 19, 2009

Beacon Power Corporation (NASDAQ: BCON) was supposed to be one of the fly-wheel winners in advanced battery technologies.  It also recently took a hit after it raised cash.  Yet the annual report yesterday said that the company will need to raise more cash to satisfy “Our continuation as a going concern.”  That doesn’t mean it is there quite yet, but it does need funding from 2009 to 2011.

Environmental Power Corporation (NASDAQ: EPG) develops, owns, and operates renewable energy production facilities in the United States.  Its annual report noted a going concern as well, yet the company said it is pursuing a number of financing avenues.  The leash looks pretty short as it said it “hopes to obtain the financing it requires by the end of the first half of 2009.”

Verenium Corporation (NASDAQ: VRNM) is down over 10% this morning at $0.345.  The cellulosic ethanol and high-performance specialty enzymes developer disclosed the going concern note.

Let’s hope that if these firms head to D.C. with their hat in hand to ask President Obama for money that they don’t fly a private jet.

JON C. OGG