Another Taxpayer-Funded Cleantech Company Goes Bankrupt

Aquion Energy files for Chapter 11. Will Tesla's Gigafactory be next?

Aquion Energy

Named the 2016 North American Company of the Year by the San Francisco-based Global Cleantech Group just seven weeks ago, Pennsylvania battery maker Aquion Energy filed for Chapter 11 bankruptcy last week. The company makes a novel sodium-ion battery. Aquion joins the long list of failed cleantech companies that were backed by government grants and loans.

Most notoriously solar-cell manufacturer Solyndra went belly up in 2011 after receiving more than $500 million in federal loan guarantees from the U.S. Department of Energy. Back in 2010, I visited the vast Ener1 lithium-ion battery factory outside of Indianapolis. As I reported, the Department of Energy had awarded a $118.5 million matching grant to Ener1 to build the plant. In addition, Ener1 was given a state incentive package of $21.3 million and a Hancock County package valued at $48.6 million. In January, 2011 then-Vice President Joe Biden visited the Ener1 plant where he declared: "It's not the government doing this. It's the free-enterprise system. We're providing seed money, one-time deposit, man, so we can spur additional investment." A year after his visit Ener1 declared bankruptcy and later emerged a privately owned company. Similaly DOE-backed Beacon Power and A123 Systems also went bankrupt.

The Pittsburgh Post-Gazette reports that Aquion Energy had received a $5.2 million grant from the U.S. Department of Energy, plus $8.6 million in grants and another $8 million in loans from Pennsylvania's Department of Community and Economic Development (DCED). In return, Aquion promised the state it would create 341 new jobs on top of the 70 people it already employed. The company has evidently now laid off 80 percent of its 150 employees. The DCED is vowing to get the money it handed out to Aquion back. "Revenue recovered by DCED from companies that fail to live up to previous commitments will be reinvested to further promote economic growth in the Commonwealth," declared DCED communications director David Misner. (Here's an idea: How about just returning it to Pennsylvania's taxpayers?)

Government "investment" in novel battery manufacturers has so far failed. The outcome of the biggest investment of all is now pending: Tesla's Gigafactory outside of Reno, Nevada. In order to persuade Tesla to build the factory in Nevada, the state government has given the company a package of tax breaks worth $1.3 billion including tax credits worth $195 million which Tesla could sell for cash. Naturally, Tesla CEO Elon Musk defends his company's reliance on government largesse. Perhaps the Tesla battery plant gamble will pay off, but the precedents are not promising. One other plea: All states should agree to level the competitive playing field by collectively refusing to hand out tax breaks to rent-seeking companies.

Comments

[Diane Reynolds (Paul.)]

The central problem with the Environmental Movement, both regarding NGOs and the Government itself (pressured into these policies by NGOs) is that it's a political movement, not a scientific one.

As such, the movement actually encourages ideas which appeal to a broad range of people largely based on emotional reaction.

[Fist of Etiquette]

Why do you hate market-driven solutions?

[Diane Reynolds (Paul.)]

51% of the people voted, and as a result it looks like I just... ordered a brand new... camping bread maker from Amazon.

[Fatty Bolger]

It's almost like there's no actual market for this shit.

[Rich]

Battery

[mad.casual]

Jeff: Listen. Do yourself a favor. When you get to her flat, check out her remote controls.
Steve: Her what?
Jeff: Her remote controls, you know, for uh, telly, or video, or sound system. Check 'em out.
Steve: Why?
Patrick: Are you talking about Susan's remotes?
Jeff: Ohh, wooh, oh yeah!
Patrick: Amazing isn't it?
Jeff: Scary!
Patrick: Scared me, too! I didn't realize a woman could be that shameless! *Steve now looks worried*

[Later]

Steve: Yeah, I'll just, um? *opens the back of the remote to find it empty* They've also climbed out.
Susan: Oh. I'll have put them in something else. *Steve checks the other remotes* I'm always running out of batteries.
Steve: No, these are empty, too.
Susan: Oh, hang on! I think I know where they headed up.

Susan goes to the bedroom and pulls something out of her bedside drawer out of camera shot. There's a vibrating sound as Steve, who followed her to the door, widens his eyes and gazes at the remotes in his hand, his mouth gaping wide. He quickly runs back to the coffee table, just as Susan comes back with a couple of batteries.

Susan: There you are.
Steve: ?Thanks.
Susan: What am I thinking? I just bought some new ones! *she heads for a drawer by the couch.* Ta-naa! *she pulls out a large pack of new batteries, Steve's mouth hangs open* D'you find your batteries always run out really quickly?
Steve: Well, I've never had any complaints!

[american socialist]

Ron thanks for the article. Sort of a side topic but similar

Do you think the current cafe standards for cars by 2025 are either back door ways to promote electrics and or govt collect fines?

[american socialist]

Imo i dont think they are feasible without at least hybrids from technical standpoint

[Ron Bailey]

as: As I reported earlier: In a new study contrasting the effects on consumers of energy efficiency standards versus energy taxes, the Georgetown economist Arik Levinson notes that both energy efficiency standards and energy taxes function as a regressive tax, taking a larger percentage of a lower income and a smaller percentage of a higher income. His analysis aims to find out which is more regressive?in other words, which is worse for poor Americans.

Levinson cites earlier research that estimates a gasoline tax would cost 71 percent less than the comparable CAFE policy per gallon of fuel saved. Meanwhile, a 2013 study calculates that CAFE standards cost more than six times as much as a corresponding gas tax for the same reduction in fuel consumption. In other words, if policy makers want people to use less fuel and drive more fuel-efficient cars, taxing gasoline is a much cheaper way to achieve that goal than mandating automobile fuel efficiency. Levinson concludes that "efficiency standards are, ironically, inefficient."

[american socialist]

Thanks and i agree with that also gas taxes are good for roads assuming they actually use them to be paid. But what about the technicalities of reaching that cafe? Is it even feasible?

[SomeGuy]

my understanding is the cafe standards are not even scientifically realistic. They also fail to take into account other rare minerals like metals for batteries and the waste and damages those cause.

If you look at a corolla gas vehicle it is about 25 cents per mile. Find me an electric car that has no subsidies that is as cheap per mile....you can't.

[SomeGuy]

IIRC they wanted 50 MPG for all cars on average. From my understanding thats not even possible do to basic energy required to make a car move and efficiency.

[NotAnotherSkippy]

Yes it's feasible. No you probably won't want that car.

[SomeGuy]

If everyone drives a fucking go-cart sure. Or we remove every safety feature and remake the fucking GEO

[NotAnotherSkippy]

No.

[SomeGuy]

http://tinyurl.com/qhyvrd3

you are full of shit. Engines are 20-40% efficient. Natural gas plants are about 50% efficient so electric cars counting whatever inefficiency they have can not be any more than 50% efficient (assuming they convert 100% efficiency which at best they are 80% if not less so 40% or less efficient.).

50 MPG is not possible unless we drive GEOs because the most efficient engines are 40% which is about the same as electric engines.

Only way to break 50 MPG is removing weight.

[SomeGuy]

http://www.brighthubengineerin.....er-plants/

The 50 MPG is a pipe dream for the average car unless it is a fucking 1000 pound GEO. AKA a death trap.

[NotAnotherSkippy]

You're an idiot. I can't help that, but I can do the math. We'll assume the average workload is level freeway driving at 50mph (60 doesn't really change much and 50 makes the math simpler as you'll see in a moment).

The engine basically has to put out enough power to overcome frictional losses. We'll assume low friction tires (losses are sub 10% anyway) and neglect that for now. Dominant losses are from drag.

Drag = 0.5 * rho(air) * A * Cd * v^2; rho(air)=1, area is ~4m^2 (absurdly large), Cd = 0.3, v=50*1600/3600=22.22m/s

So Drag=0.5*1*4*.3*22.22^2=296N
and Drag Power = Drag * velocity = 296*22.22=6582W = 6.582kW (about 8.75hp)

Now 50mph means that we go 50 miles in one hour, so we can take that 6.582kW and turn it into 6.582kWh to go 50 miles (see, wasn't that handy?).

And what is the energy content of gasoline? Why it's 35.3 kWh/gal.

Now the one thing you DID get right is the thermal efficiency of a gas engine is only about 25-30%, so that means we only get 0.25*35.3=8.825kWh of useful work out of a gallon. But gosh, the last time I checked 8.825 was bigger than 6.582, so I guess we CAN get 50mpg out of a car...

[Jerryskids]

In other words, if policy makers want people to use less fuel and drive more fuel-efficient cars, taxing gasoline is a much cheaper way to achieve that goal than mandating automobile fuel efficiency.

If. But policy makers don't want to just get people to use less fuel and drive more fuel efficient cars, they also want to keep drawing them fat policy maker paychecks. Tax gas and let consumers work out the best way to use less of it? Then the consumers are doing all the work and sooner or later somebody's going to ask what work the policy makers are doing and why they're getting paid for the work the consumers are doing. It's the same way with pretty much all regulation - tell the affected population what the goal is and let them work out the best way to get there and the best way always turns out to be whatever the consumers will buy. And where does the regulatory paycheck stream play into that?

[SomeGuy]

less government employees and more productive members of the community making things consumers want?

[Jerryskids]

Government "investment" in novel battery manufacturers has so far failed.

Naw, man - they're successfully finding a thousand ways not to do things. They're chasing the dragon and some day they'll find a way to make central planning better than the free market.

[SomeGuy]

Still wondering where my nanowire/nanosphere batteries are...they were supposed to be commercially available around 2010-2012 :/ I really want 8x battery life :/

[kV]

OT: I've been swamped with work the last few weeks and my visits to HnR have been sporadic. I saw that some folks were talking about leaving, but I thought they were joking/blustering. I guess not. Where'd everyone go?

[Citizen X - #6]

They have gone where the woodbine twineth.

[Fatty Bolger]

Glibertarians.com, for one.

[Rufus The Monocled]

"It's not the government doing this. It's the free-enterprise system. We're providing seed money, one-time deposit, man, so we can spur additional investment."

Man?

[Raven Nation]

Joe's a hep cat, man.

[Fist of Etiquette]

Broads don't understand capital investment, man, so don't even address them.

[creech]

Just the latest fad. Government has always tried to put its thumb (and the taxpayers' money) on the scales. In 1854, the local government near where I live, lost $16,000 of the $20,000 it put up to ensure a railroad came to town. The landscape is littered with failed canals, railroads, airports, etc. that were going to spur additional growth, jobs and investment.

[eyeroller]

Read the Elon Musk defense of his welfare queenism. You will laugh and cry.

[Rufus The Monocled]

And he brought Solar City into the fold.

[Get To Da Chippah]

Ener1 was given a state incentive package of $21.3 million and a Hancock County package valued at $48.6 million. In January, 2011 then-Vice President Joe Biden visited the Ener1 plant where he declared: "It's not the government doing this. It's the free-enterprise system.

But you peons who open restaurants and other businesses? You didn't build that.

[Enjoy Every Sandwich]

"You didn't build that" only applies to businesses that succeed. If a business succeeds, all credit to Lizzie Warren! If it fails, it's on you--you did build that.

[My Dog Bites Better Than Yours]

Aquion Energy had received a $5.2 million grant from the U.S. Department of Energy, plus $8.6 million in grants and another $8 million in loans from Pennsylvania's Department of Community and Economic Development (DCED). In return, Aquion promised the state it would create 341 new jobs

$21.8M / 341 = $64k per job.

I hope they pay well.

[Sevo]

Who knows? Maybe one day Musk will have to run an actual business. I could happen.

[NotAnotherSkippy]

On mars.

[John B. Egan]

This article reminds me of that children's puzzle 'One of these things is not like the other'. Truth is none of these things is like the other. An experimental sodium based battery failed? OK. it had no established market. A solar plant failed?Yeah. Solar is still growing at a massive rate. They just happened to be coming on the market when China began subsidizing Chinese solar cells. Ener1 was beginning to produce Li-ion batteries for electric cars before electric cars really hit their stride. Musk seems to have a handle on the electric car market, and is obviously a driving force (snicker) in the auto battery business...In fact, his factory will not only have a built in clientele servicing his own Tesla autos, but will now be able to offer batteries to the burgeoning electric car/hybrid market. Every manufacturer has now produced either an all electric or hybrid vehicle. If I recall, 30% of all vehicle sales are expected to be electric by 2030.I guess I'd like to see the flip side of this...Which government funded businesses succeeded? Does the government support of our banks and auto industry after the Bush Jr Depression count?

[NotAnotherSkippy]

Take away the subsidy and let's see how much solar grows. And even wifh all fhat growth it amounts to about 1% of electricity produced in this country.

Successful electric vehicles? You mean like the ev1 or the volt or the leaf or fisker or... Oh, you mean tesla, the same tesla that missed shipments again last year and is years late on its model 3 and has said if will need yet anofher capital raise. The tesla thst has never had a profitable year in its life (and only a couple of profitable quarters thanks to zev credit sales). Awesome.

[American Veteran Patroit]

I was in Sacramento at a high speed (totally broke) rail board debacle run by a bunch of liberals who have found a way to fleece the taxpayers into a, as they love to say, transformative innovated transportation land use reorganization of our cities to conform to their agenda 21 concepts of living on top of each other in 3-mile circle or some foolish like that.

There is nothing wrong with transportation upgrades when they are a proven plan and makes sense and moonbeams disgusting taxpayer unbudgeted unknown cost legacy train from a week patch ending up between to cities 119-miles later, that will never achieve HSR status in the true sense and as we found out today the train operator is not scheduled to ready for at leave 9-years or using the official CA construction matrix of double original estimates 18-years from today. Actually reality cost upwards to 7 times current $64 billion bogus estimate.

Not exactly the theme of the article but I think I made my case.