Failure of Abound offers lessons
Abound, based in Loveland with a manufacturing facility in southwestern Weld County outside Longmont, filed for U.S. bankruptcy protection in Delaware. The move means elimination of 125 jobs and an end to plans for a second manufacturing facility in Indiana.
Abound began with great promise, taking technology developed at Colorado State University and the National Renewable Energy Laboratory to transform ordinary sheet glass into photovoltaic panels. The company received a $400 million loan guarantee from the U.S. Department of Energy in 2010. At the time, the company anticipated adding 1,500 workers, mainly at a planned plant in Tipton, Indiana.
But the company’s bankruptcy means all such dreams have evaporated.
Shades of Solyndra? Not exactly.
Whereas Fremont, California-based Solyndra LLC failed after borrowing $535 million, Abound borrowed $68 million in federally guaranteed funds — far short of the initial $400 million guarantee. Taxpayers still will be on the hook for $40 million to $60 million, an unacceptable number.
Having the federal government guarantee loans for private industry — especially in a nascent, competitive solar-manufacturing sector — is a shaky business at best. Republican presidential candidate Mitt Romney likely will use the Abound failure as evidence of another Solyndra-like policy debacle. (How long before he shows up at the Abound plant in Weld County, as he did at Solyndra?)
But we hope that federal legislators will discard partisan bickering enough to realize that renewable energy deserves support — but not through direct loans to solar manufacturers.
Admittedly, both Abound and Solyndra were sent reeling by plummeting prices for solar panels. Competition from China sent prices down by half in 2011, leading to allegations of dumping. The U.S. Commerce Department has initiated several cases against Chinese dumping of cheap solar cells, with likely imposition of tariffs.
But the action, taken in May, was too little too late for Abound.
Looking forward, the federal government has a critical role in promotion of new technologies through Small Business Innovation Research grants.
Additionally, renewable-energy tax credits are a fitting balance for subsidies provided to companies engaged in development of fossil fuels, while promoting transition to cleaner forms of energy. Renewable-energy manufacturers should be granted tax credits or some other form of relief until the industry matures.
Regulatory burdens, too, can be reduced, making it easier for renewable-energy companies to build plants and obtain permits.
Many will point to Abound’s failure as yet another example that renewable energy is not sustainable as a business model. That would be a tragic mistake.
Abound has failed, but that doesn’t mean solar has to fail, too.
Christopher Wood can be reached at 303-440-4950 or via email at firstname.lastname@example.org.
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