In the latest black eye for the Department of Energy’s controversial loan guarantee program, Colorado-based Abound Solar is preparing to shut down less than two years after being approved for a $400 million loan.
The Abound loan had been offered to aid the construction of manufacturing plants in Longmont, Colo., and Tipton, Ind.
Abound’s failure is almost certain to bring another round of Republican criticism of the Obama administration program that delivered the loan guarantee for the now-bankrupt Solyndra solar energy company. Before it went under last fall, Solyndra burned through $527 million of its $535 million loan.
DOE quickly pointed out today that Abound was only able to draw down $68 million from its loan because department officials, who were concerned about the company’s future as early as last fall, froze the company’s loan in September.
That move took place just weeks after Solyndra announced that it was shutting down its operations in California.
“Because of the strong protections we put in place for taxpayers, the Department has already protected more than 80% of the original loan amount,” DOE spokesman Damien LaVera said in a blog post. “Once the bankruptcy liquidation is complete, the Department expects the total loss to the taxpayer to be between 10 and 15 percent of the original loan amount.”
LaVera added that while the news about Abound is disappointing, the loan program was always expected to have a few failures as the government invested in cutting-edge technology.
“This outcome reflects the basic fact that investing in innovative companies – as Congress intended the Department to do when it established the program – carries some risk,” he wrote.
Administration officials today noted that Abound received bipartisan support when it sought its loan.
In a letter dated Oct. 30, 2009, Rep. Dan Burton (R-Ind.) joined 10 Indiana lawmakers to express support for the company’s loan application.
“Abound Solar indicated that their [photovoltaic] modules will be capable of supplying solar energy at costs competitive with conventional fossil fuels,” the Indiana lawmakers wrote. “This advantage translates into important economic benefits to Tipton County, the State of Indiana and indeed the nation at this critical juncture. … We are confident you will give thoughtful and thorough consideration of the merits of the application submitted by Abound Solar, Inc.”
M.J. Shiao, a senior analyst at GTM Research, said today that Abound’s failure is a consequence of the continued slide in crystalline silicon pricing and increased competition for limited global demand of solar modules.
“Abound was still in the earlier stages of technology and commercial development, and despite over $220 million in private investment and $70 million drawn from its $400 million U.S. Department of Energy (DOE) loan guarantee, simply didn’t have the cost and downstream reach to survive in the tumultuous solar market,” Shiao said.
Earlier this year, Abound garnered attention from DOE critics on Capitol Hill when the company announced that it would “temporarily” eliminate 180 jobs as part of a re-evaluation of its production plan. The company said then that the layoffs were necessary to help accelerate the production and launch of a next-generation high-efficiency solar module that it would begin rolling out by the end of this year.
But the House Energy and Commerce investigations subcommittee chairman, Florida Republican Cliff Stearns, who is leading the ongoing investigation into Solyndra, said at the time that Abound was on his “watch list” of troubled DOE loans.
“To me, it looks like another Solyndra, because they are doing the same thing and the market has dropped so dramatically on solar panels, I don’t see how they can make it,” Stearns said (E&ENews PM, Feb. 29).
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