In late February, Northern Colorado’s own solar panel manufacturer, Abound Solar, announced it was halting production of its cadmium-telluride thin-film solar panels and laying off 180 full-time workers and another 100 temporary workers, a good deal of its staff. The move, the company said, will allow Abound to shift its manufacturing to a next-generation module with greater efficiency.
Based in Loveland and using technology developed at Colorado State University, Abound has been backed by $400 in federal loan guarantees from the U.S. Department of Energy, in addition to venture capital investment. The same federal program supported Solyndra, the California-based solar business that went bankrupt last year, with $535 million in loans. The government doesn’t expect to recoup most of that money. The case of Solyndra and green-energy loan guarantees have since become talking-point fodder for critics of the White House, linking the program and beneficiaries to political favors and campaign contributions.
Now it’s Abound’s turn for scrutiny. Following the layoff announcement, online chatter suggested Abound received its loan guarantee as a favor to Fort Collins billionaire philanthropist and Democratic Party booster, Pat Stryker, who has also invested in Abound. More substantially, there has been a lot of talk about the departure of several Abound executives, including past CEO Tom Tiller, who have jumped ship in recent months.
But is Abound a boondoggle? Hardly.
So far, Abound has used $70 million of its $400 million loan guarantee to build out its manufacturing facilities, meaning it’s not remotely as leveraged as Solyndra. In addition to a production facility in Longmont, Abound has also acquired property in Tipton, Ind., for a second production line that was supposed to start running in 2013, though some delay is now expected.
The company’s assertions that it needs to focus on developing new panels with higher efficiency certainly ring true. Industry observers project that technological advances may eventually enable cadmium-telluride panels to achieve between 16 and 20 percent efficiency (a measure of the energy that a solar panel converts into electricity). Arizona-based FirstSolar, the world’s second-largest photovoltaic manufacturer tested a cadmium-telluride module last summer that peaked at over 17 percent efficiency, though it averaged 11.7 percent over time. Abound officials have said their new “AB2” 85-watt module runs at 12.5 percent efficiency, a result verified at the National Renewable Energy Laboratory in Golden.
“Current market conditions are challenging for all U.S. solar manufacturers, but the long-term winners will be manufacturers of the lowest cost per watt, most reliable systems,” Abound CEO Craig Witsoe said in a press release.
Low costs are indeed helping to sort winners and losers in the solar manufacturing field.
With massive investment and subsidies for clean-energy technology in China, the prices of solar photovoltaic panels have dropped steeply in recent years. The market has tilted so sharply toward cheap Chinese solar modules that seven solar companies with U.S. offices filed a complaint last year with the Department of Commerce and the International Trade Commission. The case alleges that Chinese companies are unloading products below fair market value to beat down the American industry. Government trade officials are expected to issue a decision soon, which could result in 100-percent tariffs on the Chinese products and a leveled playing field for U.S. solar businesses.
Of course, low (and fair) prices are a good thing – especially as renewables help shift energy production away from fossil fuels that contribute to air and water pollution and climate change. That’s why the renewable industry has been booming, but that means there will be some busts, too.
The risks and the lack of access to credit for enterprises in an emerging industry are precisely why loan guarantee programs exist. The same DOE program that has backed Solyndra and Abound has also offered financial protections to nuclear and coal-fired power plants, although those cases don’t seem to rile the new class of critics.
Competition from China or the threat of climate change shouldn’t encourage the federal government to hand out sweetheart deals to any business. But just because a company has stumbled while trying to navigate an unstable industry doesn’t mean it’s corrupt.
Abound will likely have its name tossed around and even smeared during the election season, as Republicans and Democrats spar over the economic – and, maybe, the environmental – effects of President Obama’s clean-energy policies and stimulus plan. But the company has an obvious solution to protecting its reputation and being among the leading players in the clean-energy industry. All Abound has to do is actually launch its new production line later this year – as it’s announced – and bring back its workforce.
Joshua Zaffos is a writer based in Northern Colorado who covers environmental issues for the Northern Colorado Business Report. Contact him at email@example.com.