Bankrupt Colo. solar firm sticks taxpayers for $68 million, doomed by poor quality
Despite glowing press clippings in which the CEO of Colorado-based Abound Solar claimed seven months ago that his company was the “anti-Solyndra,” the green-energy firm has filed for chapter 7 bankruptcy liquidation. It is terminating all 125 workers at its Loveland, Colo. headquarters, and is blaming China for its failure.
The U.S. Department of Energy awarded Abound Solar a $400 million loan guarantee in December 2010, funds that the then-three-year-old startup said it would use to compete with solar panel industry leader First Solar.
The company had tapped into about $70 million of those funds by August 2011 when the DOE unplugged it from the taxpayers’ cash stream, around the same time the more famous Solyndra went bankrupt. That company ate through $535 million in loans guaranteed by the federal government before it failed.
While cheap imports from China have crippled much of the U.S. solar panel market, Abound’s problems appear to have been rooted in the quality of its own products, the competitiveness of its business model and its inability to retain top talent.
In May, the Colorado Watchdog blog published an internal Abound Solar email revealing that in November 2010, the company dispatched an engineering technician to remove an entire rooftop of defective solar panels from the investment headquarters of wealthy Democratic benefactor Pat Stryker. Bohemian Companies, Stryker’s investment firm, was among the early investors that brought Abound approximately $300 million in startup capital.
The email directed the technician to retrieve “two unused” panels for “FA” [Failure Analysis], suggesting that their construction — not a hailstorm or other natural event — was to blame for their malfunction.
This rooftop-wide solar panel failure occurred just one month before Abound inked its deal with the Department of Energy.
In January, the firm outlined its goals for 2012, including reaching an energy cost of $1 per watt “ASAP.” But Abound’s competitors had already reached that gold standard of solar production efficiency, in some cases more than two years earlier.
A recent House Oversight Committee report on the Department of Energy’s green energy loan program highlighted concerns raised by credit rating agencies that vetted potential recipients of green-energy grants and loan guarantees. The Fitch Ratings company, the committee reported, “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.”
Trade journals have chronicled Abound’s difficulty to keep top management on board. And in February the free-market Independence Institute reported that Weld County, Colo. officials lost sufficient faith in Abound to revoke 2012 tax incentives they had previously extended to the solar energy company.
In March, another Colorado blog published an internal Abound Solar email showing that the company had shut down production, without advance warning, in December and January. Employees were instructed to use their paid time off, and then to take days off without pay.
The email told employees that the shutdown represented “best of class employer actions,” but warned against “let[ting] the purpose for this shutdown get the rumor mill started.”
GreenTech Media reported in March that insiders had disclosed Abound’s burn rate — the rate at which the company spent its operating capital — as “$2 million per week.” In its statement of its 2012 goals, Abound told company insiders that it intended to “stretch payables,” putting off paying creditors as long as possible.
Abound laid off 200 workers in February with an eye toward “retooling” its factory for a new product, drawing criticism from industry journalists who complained that “[a] successful manufacturing operation shouldn’t stop running the lines all together in order to switch to new equipment.”
Todd Shepherd is an investigative reporter for Colorado Watchdog, and is the founder of CompleteColorado.com, a Drudge-style news aggregator for the state. Follow him on Twitter