City sued over stalled battery project

Virginia-based Ashlawn Energy LLC is suing the city of Painesville over allegedly abandoned efforts to build an energy storing battery facility in the city.

In the suit filed in the United States District Court Northern District of Ohio, the company claims city leaders reneged on promises made to Ashlawn.

“As a result, millions of dollars in federal stimulus funds were squandered, hundreds of thousands of Painesville taxpayer dollars were wasted, city residents were robbed of a crown jewel progressive energy project and Ashlawn Energy’s business was effectively crippled.”

In 2010, the city and Ashlawn were awarded federal grant money to demonstrate the company’s energy storage technology, the Vanadium Redox Flow Battery at the city’s 32 megawatt coal-fired power plant.

The federal stimulus funds were part of the U.S. Department of Energy’s Smart Grid Demonstration Program. The program was designed to provide financial support in grants up to one-half the total project cost. The program included approximately $600 million to 32 projects across the country.

Ashlawn claims in the lawsuit that the project was a “major coup” for both the company and the city.

For Painesville, the battery project offered “an environmentally friendly and economically sound way to alleviate the growing pressure on the city’s aging coal power plant, and an opportunity to establish the city as a manufacturing hub for energy storage batteries.”

Ashlawn states in the suit the project garnered unprecedented national attention with both Ohio’s governor and the president pointing to Painesville “as a city on the cutting edge of progressive energy solutions.”

“Norma is CEO of Ashlawn Energy up in Painesville. It’s a company that provides multi-megawatt energy storage solutions using -- and I have no idea what this is -- Vanadium redox fuel cells. That’s one of the coolest things I’ve ever said out loud,” then-President Barack Obama said at the Winning the Future Forum in Cleveland in 2011.

When the project was first announced, then-Governor Ted Strickland said the project would help advance the goals of the state’s energy reform plan.

For Ashlawn, the project offered a unique opportunity to partner with federal, state and local government entities to demonstrate the “game-changing capabilities of its VanCharg batteries.” In the suit, Ashlawn claims that success in Painesville would have been a gateway to widespread commercialization of the battery.

The project started off well, according to the company, but in 2012 they encountered an unexpected hurdle when Ohio eliminated state funding that the parties had anticipated receiving. Still, Ashlawn and then-city manger Rita McMahon’s city government worked together to find a pathway forward for the project.

Before that new plan was finalized, McMahon retired.

“Though the battery project still had its supporters in Painesville’s city government, McMahon’s successors demonstrated apathy, and at times, outright animosity toward Ashlawn,” the company alleges in the suit.

Over the next five years, the project was kept in a constant state of limbo, the suit states.

“While they had no problem paying lip service to Ashlawn, the federal government and their constituents about wanting to go forward with the project, when the time came for action, Painesville’s leaders continuously stonewalled and stalled,” the company claims in the lawsuit.

More than $4 million has been invested in the Painesville project and there is nothing to show for it, Ashlawn stated. Ashlawn had invested more than $3.8 million as of 2017 and the city spent more than $763,000.

In 2017 and into 2018, Ashlawn was working to obtain an agreement with the New York City Transit Authority for a battery project in one of the agency’s terminals.

In May 2018, the transit agency’s chief of innovation and technology informed Ashlawn that after discussions with Painesville representatives about the company’s performance in its battery project, the agency could not enter into an agreement over the terminal project, the suit states.

The company then sent a letter to Painesville officials requesting they cease and desist from misrepresenting Ashlawn and to retract and correct any misstatements that had already been made. Ashlawn also said it still wanted to find a mutually acceptable solution to move the city’s project along, but if the city was not even willing to talk, Ashlawn would be “left with no choice but to pursue a lawsuit to recover damages.” The letter asked for officials to provide a list of available dates and times for a face-to-face meeting to discuss solutions.

Ashlawn said it never received a list of meeting dates and instead received a letter from city legal counsel Joseph Gurley six days later that stated it had no evidence that its policy against defamation had been breached and referred back to a September 2017 letter about the future of the project.

“The city was not even willing to meet with Ashlawn,” they allege in the suit.

The lawsuit was filed in federal court June 4. Ashlawn is suing for breach of contract, promissory estopped, defamation and intentional interference with prospective economic advantage.

The company is seeking nearly $18.5 million from Painesville.

Requests for comment from Painesville officials were not immediately returned.