Update 10 a.m. PT:
The DOE confirmed that Abound will be closing its doors and declaring bankruptcy next week in a posting on its website today. The post noted, "Because of the strong protections we put in place for taxpayers, the Department has already protected more than 80 percent of the original loan amount. Once the bankruptcy liquidation is complete, the Department expects the total loss to the taxpayer to be between 10 and 15 percent of the original loan amount."
Greentech Media has learned from reliable sources within the company that Abound Solar will be shutting its doors as soon as Thursday, after failing to find a buyer. Our source indicates that there will be an all-hands meeting at 11 a.m. on Thursday to break the news.
The VC-funded DOE loan-recipient was working with the cadmium telluride (CdTe) thin-film materials system and had hoped to achieve the success of its CdTe competitor First Solar.
The firm was the beneficiary of a $400 million DOE loan guarantee, only $70 million of which has been drawn down. So, despite the imminent comparisons to Solyndra, this is bad news -- but not quite on the scandalous scale of that solar module maker.
About a month ago at an all-hands company meeting, there was news of an unnamed prospective buyer which never materialized, according to our source, who added that "Abound will meet with the DOE tomorrow to finalize the terms of the shutdown. Then we will have the meeting, and non-essential staff will be let go at that time."
In March, Abound went through layoffs and a production halt of its first-generation, 10.5-percent-efficient CdTe PV module in order to transition to building its next-generation, higher-efficiency module in a process that cost 180 full-time jobs. At that time, our sources indicated that there was roughly $7 million in the bank, a painfully short runway, and that vendors were being paid in a very selective manner.
The firm awaited $10 million from the DOE and $10 million from its investors, but had a bit of a chicken-and-egg problem. The DOE was waiting for the investors, and the investors were waiting for the DOE. Abound's venture investors include DCM, Technology Partners, GLG Partners, Bohemian Companies, and Invus. DOE money is milestone-based and comes with very specific spending covenants.
Abound's management found itself in a very sticky spot, locked in a survival race between burn rate and ramping up the factory to run at high enough utilization to lower costs and generate revenue and eventually profit. Add impatient investors, a flinchy DOE, and a media faction hungry for Obama DOE scandals -- and it was a queasy mix, almost from the start.
Abound shipped 25 megawatts in 2010 and approximately 45 megawatts in 2011.
Abound was building 2-foot-by-4-foot CdTe PV panels (as does General Electric), inspired by the dimensions of First Solar's panels. Within the CdTe materials systems, there's no standard process. First Solar uses a vapor transport deposition (VTD) process, while Abound Solar (and PrimeStar/GE) used/uses a close space sublimation (CSS) process for CdTe manufacturing.
Abound had to compete with thin film leader First Solar. First Solar's 87-watt CdTe panels with a 12.2-percent conversion efficiency and a cost of $0.73 per watt, with expectations of reaching the mid-$0.60 range this year or next. Abound could not survive without approaching that cost-per-watt trajectory as well as coping with the plunging cost of Chinese polycrystalline solar panels.
At least half of Abound's shipments came from projects installed in India supported by the Ex-Im bank.
That covers the technical details.
As with Solyndra, a failure of this nature, given the considerable taxpayer monies lost, begs raises the question of whether government should be picking technology winners and if the loan application was administered in a fair manner.
One of Abound's investors, Bohemian Companies, is run by Pat Stryker, a billionaire medical device heiress well-connected in Colorado Democratic circles and a major donor to the Obama administration. Stryker donated $50,000 to the 2008 Obama inauguration, according to Open Secrets.
Abound also had support from the Republican side.
Indiana's GOP governor, Mitch Daniels, supported an $11.85 million tax credit for the firm, and "two Abound investors were major Republican donors who have given more than $100,000 to Republicans in the last few years." according to reports in the National Review.
Ratings firm Fitch had called the loan a “highly speculative” investment, but the loan went through anyway. Although any loan to a U.S.-based solar manufacturer is a highly speculative investment.
We'll report on the details as we learn more. Stay tuned.