Yet Another DOE Green Failure as Abound Solar Goes Bankrupt
The next time a green energy company announces it is intentionally slowing down for a transition phase, or that a technology breakthrough is just around the corner, or that all that’s needed for future success is just a little more taxpayer “investment” – don’t believe it. It's likely a lie.
The latest example is Loveland, Colo.-based Abound Solar, which only four months ago laid off 70 percent of its employees in what it said was a plan to upgrade its plant to manufacture more efficient solar panels, with plans to restore production levels and rehire most employees within six to nine months. Yesterday – hidden under the news that the Supreme Court upheld Obamacare – the company released a statement that said it would end operations next week, liquidate, and make unemployed its remaining 125 workers.
The Department of Energy had awarded Abound a $400 million loan guarantee, $70 million of which it had used. DOE spokesman Damien LaVera said in a weak, meandering defense of the loan program that the cost to taxpayers would be only $40 million to $60 million after Abound’s assets are sold. Don’t you feel better?
“Pioneering projects like this are what will help the U.S. recapture the lead when it comes to supporting innovation in the global clean energy economy,” he said. “Not only is this investment creating thousands of jobs, but it is also increasing our renewable energy manufacturing capacity and putting us on the path for our future prosperity.”
One year ago, with no evidence whatsoever, DOE flack Minh Le crowed that Abound employed 350 and would “soon...be three times as large.” And as recently as October he boasted that Abound was “scaling up production” of its thin-film panels, with the laughable assertion that the company was “hoping to mimic the success of First Solar.” That Arizona-based company has received more than $3 billion in loan guarantees for its various solar farms, yet all that taxpayer help hasn’t prevented layoffs, a class action lawsuit from investors, a plummeting stock price, as the company padded its executives’ bank accounts.
Maybe part of the problem is that Abound did follow the First Solar pattern all the way to its own demise. They certainly knew the ways of cronyism with government schmoozing.
At the center is wealthy Colorado philanthropist Pat Stryker, whose Bohemian Companies had significant investment in Abound. News Web site The Complete Colorado revealed “fingerprints” of a “pay-to-play agenda” when Abound received its conditional approval in September 2010. Stryker had donated $475,599 to federal Democrat candidates and causes over the 2008 to 2012 election cycles, according to the Center for Responsive Politics. Included in that amount was $11,900 in maximum contributions to President Obama’s two campaigns for the White House, and Stryker also was an $87,500 bundler for the president’s Inaugural Committee, the People’s Press Collective discovered, and she donated $50,000 herself. The Sunlight Foundation also reported that she gave $35,800 to the 2012 Obama Victory Fund, and in October 2009 Stryker also visited the White House.
Stryker also has contributed millions of dollars to Democrat candidates for state and federal office in her lifetime. Among those are gifts to former U.S. Rep. Betsy Markey, whose district includes the Abound facility – $9,400 made up of max contributions for her 2008 and 2010 successful runs for office. Abound helped pay for ads in 2009 that thanked Markey for voting for the cap-and-trade bill that passed the House that year, which would have benefited renewable energy companies. And according to the Fort Collins Coloradoan, Markey also pushed for approval of the loan guarantee for Abound.
“Without the loan guarantees, they would not be able to really move forward on this project,” Markey told the newspaper. “It’s seed money that’s going to be fully paid back by Abound.”
But in a report last month, Colorado Watchdog discovered that Stryker herself was a victim of Abound’s poor-quality products. A November 2010 email obtained by reporter Todd Shepherd revealed that an Abound salesperson asked a company engineer to go to Stryker’s Bohemian headquarters to “take down the broken modules (I think 14 total) as well as 4 that we shipped them originally….” The email indicated that the four panels would undergo “failure analysis.”
In another indication of trouble, The Complete Colorado in March unveiled other internal emails from Abound that told of “an unexpected, and previously unreported 10 day production shutdown over the Christmas and New Year’s holidays. The message, which went to all Abound employees, admonished, “Don’t let the rumor mill create false purposes for this shutdown.”
Colorado Watchdog also noted a March House Congressional Oversight Committee report – titled “The Department of Energy’s Disastrous Management of Loan Guarantee Programs” – which explained how credit evaluator Fitch Ratings “described Abound as lagging in technology relative to its competitors, failing to achieve stated efficiency targets, and expecting that Abound Solar will suffer from increasing commoditization and pricing pressures.” Fitch determined there was only a 45-percent likelihood that Abound would repay its loan to taxpayers. Given the timing, The Complete Colorado properly wonders today, “Did Abound have a bad product and the DOE knew it?”
Despite all those financial troubles, it didn’t stop the company from making a sudden foray into K Street influence peddling, spending $70,000 in the 4th quarter last year to lobby the House, Senate and Department of Energy solely about the Loan Guarantee program. Was it an emergency effort to preserve its access to the unused portion of its award?
As I reported for NLPC in February, putting all this taxpayer money at risk on green energy bets is unnecessary. Billionaire investors such as the Walton family, Elon Musk, and the Kleiner/Perkins investment firm – in addition to willing companies such as Google and Apple – have plenty of resources to keep such companies afloat. But they don’t want to keep pouring their money down a rat-hole, so they get government to force taxpayers to do it instead.
And now with failures like Solyndra and Abound Solar, in addition to several others, these crony redistributors leave the political fallout to others and just move on to their next “green” scheme. Unfortunately we won’t find out if the ultimate political price is paid until November, but in the meantime DOE continues with its renewable energy “investments,” which will undoubtedly lead to more pain for taxpayers.
Paul Chesser is an associate fellow for the National Legal and Policy Center.