Ener1 bankruptcy and DOE grant

Battery maker Ener1 is in news for yesterday's Chapter 11 bankruptcy filing, two years after its subsidiary was awarded a $118.5 million grant from the U.S. Department of Energy.

Ener1 Inc. holds several operating companies.  Its subsidiary EnerDel produces automotive-industry thin cell lithium-ion batteries in Indiana.  Other subsidiaries focus on fuel cells and nanotechnology, as well as manufacturing automotive-grade lithium-ion batteries in South Korea.

Battery making unit EnerDel won the $118.5 federal grant in 2009 for its proposal to expand two battery factories in Indiana and add a third facility.  Many of the details of the proposal are available in the final Environmental Assessment prepared by the Department of Energy in support of the incentive:

The proposed financial assistance would help EnerDel expand its manufacturing and testing capabilities at two existing facilities and start up a third facility for future development into a complete lithium-ion battery manufacturing plant. The existing EnerDel facilities consist of a 92,000-square-foot building in Indianapolis and a 32,000-square-foot building in Noblesville, just north of Indianapolis. The lithium-ion battery manufacturing capacity of the Indianapolis facility would increase through the addition of equipment, and the Noblesville location would transition into full use as a prototype development and battery testing facility through the addition and change-out of equipment. The exteriors of the Indianapolis and Noblesville facilities would be unchanged. The third facility is a newly acquired vacant warehouse near Greenfield, Indiana, just east of Indianapolis. This 423,000-square-foot building would require minor construction and equipment installation on the exterior of the building; however, essentially all of the work necessary to transform it into a manufacturing plant would consist of installation of equipment inside the building.

EnerDel received a $118.5 grant pursuant to a cost-sharing arrangement.  Ener1 has since said that electric vehicles haven't caught on with drivers as quickly as it expected.  Key customer, Norwegian electric vehicle maker Think Global, went bankrupt in June 2011. 

Yesterday's bankruptcy filing by Ener1 comes at a time when policymakers are scrutinizing the energy department's grant and loan programs.  Following the recent failures of other DOE loan guarantee and grant recipients such as Solyndra LLC and flywheel energy storage developer Beacon Power, Ener1's bankruptcy will likely add to the debate over the proper model for federal investment in the private sector energy industry.