Abound Solar Got $400M Fed Loan Despite Low Rating
Colorado company laid off half its workforce this week.
March 2, 2012 — -- A month before Abound Solar announced it would be laying off nearly half its workforce, Congressional Republicans alerted the U.S. Department of Energy that they had questions about the decision to loan the Colorado firm $400 million.
The House Committee on Oversight and Government Reform asked Energy Secretary Steven Chu to explain how the solar panel manufacturer had qualified for the loan after the ratings firm Fitch had determined the company would make a "highly speculative" investment.
"Fitch describes Abound as lagging in technology relative to its competitors, failing to achieve stated efficiency targets, and expecting that Abound will suffer from increasing commoditization and pricing pressures," wrote Rep. Darrell Issa, R.-California, the committee chairman. "DOE's willingness to fund Abound, despite these concerns, calls into question the merits of this loan guarantee."
Issa's letter to Chu, dated January 30, came just weeks before the company announced it would lay off 180 of its 400 workers as it tries to retool to produce a more efficient type of solar panel in order to keep a technological edge on Chinese manufacturers who are flooding the market with less expensive models. So far Abound has drawn down $70 million of its $400 million federal loan.
It remains way too early to determine whether Abound is poised to follow the trajectory of the best-known solar manufacturer to receive a sizeable government loan -- Solyndra, the California firm that filed for bankruptcy in September after having burned through the bulk of its $535 million federal loan.
Abound's chief executive, Craig Witsoe, told ABC News he hated "to see politicians [comparing Abound to] Solyndra to score political points."
"Obviously, any big failure like that, a lot of people don't know the details of the different technologies," he said. "Our technology is very, very different from Solyndra. Solyndra didn't have a competitive, cost-effective technology. Our strategy is to create a most cost-effective solar module."
U.S. Energy Department officials were also quick to note differences between the two companies, most notably that Abound Solar also had strong backing from Republicans in Indiana who shared the hope that it could be a catalyst for new manufacturing jobs. The state's GOP governor, Mitch Daniels, even supported an $11.85 million tax credit for the firm. Energy officials also said that two Abound investors were major Republican donors who have given more than $100,000 to Republicans in the last few years.
"The Department's decisions about Abound were made on the merits," said Damien LaVera, a DOE spokesman. "Abound is an innovative domestic start-up company with a history of bipartisan support, including from the Governor of Indiana."
Energy officials also maintain hope that Abound will find its way in a tough solar energy market. "While the challenges facing solar manufacturers have been widely reported," said LaVera, "we continue to believe that supporting innovative companies like this is important to ensuring our nation has the ability to compete for the clean energy jobs of tomorrow."
Pattern to Energy Loans?
Issa's letter, however, suggests that House Republicans believe the DOE loan to Abound Solar follows a troubling pattern. In addition to raising questions about the degree of risk involved in putting taxpayer funds into Abound, Issa also inquires about the company's political ties to the Obama administration. Namely, Issa notes that a major investor in Abound Solar, the Bohemian Companies, is run by Pat Stryker.
Forbes puts Stryker's net worth at more than $1.3 billion, and Stryker has donated nearly $500,000 to Democrats in the past five years, including $50,000 to Obama's inaugural fund and $35,800 to his victory fund, according to the Center for Responsive Politics.
A message left at Stryker's office in Colorado has not been returned.
Energy Department officials reiterated that the decisions made by loan officials were based on the merits, and never on political considerations.
Two Republican-led House committees have been investigating the Obama administration's green energy loan program, and to date, no evidence has emerged showing loan recipients used political influence to secure their money.