Although Jonathan Silver stole my attention in the recent House Oversight hearing that ironically seemed to be lacking in committee members, Abound Solar deserves some notoriety. Abound is now the third major bankruptcy recorded from the $16 billion 1705 Loan Guarantee Program –– and they won't be the last. A DOE portfolio, where "23 of the loans were rated Junk grade due to their poor credit quality, while the other four were rated BBB, which is at the lowest end of the investment grade of categories.”
To get you up to speed on Abound, just over two years ago, during his weekly radio address, President Obama touted Abound Solar as a huge jobs creator project, stating that it would create "2,000 construction jobs and 1,500 permanent jobs" between Abound's two plants in Colorado and Indiana. Then in December of 2010, Abound Solar was awarded a $400 million loan guarantee from the 1705 DOE Loan Guarantee Program, despite the fact that in November 2010, it was rated “B” by Fitch: highly speculative, worse than Solyndra’s rating of BB-. And in July 2011, Abound was awarded $9.2 million loan from the Export-Import Bank, you know, the federally funded bank that makes riskier loans financed with taxpayer money.
Since the end of February of this year, troubling Abound reports circulated; massive layoffs and a compelling case for a pay to play scheme surfaced, causing more energy headaches for the DOE and the White House. When March came, the House Oversight investigation confirmed that cronyism most likely ruled the Abound loan. May rolled around with another green energy Oversight hearing, including the appearance of then CEO Craig Witsoe, explaining Abound troubles, but no mention of a bankruptcy on the horizon. Because two months later (Jun 28, 2012), Abound went down!
This was after Witsoe, in December 2011, made sure to inform American taxpayers that his company was the “anti-Solyndra." Well, the silver lining may be that the taxpayer loss will only be about $70 milllion, but what about that $9.2 million?
Article comments
1 - Glenn Contrarian
Christine -
Forty or fifty million dollars in taxpayer loans are one thing, and thirty billion in subsidies are another thing altogether - one's almost a thousand times greater investment than the other. Do you really think that great a difference in investment doesn't have an effect on the bottom line? Do you really?
And yes, there's corruption - and there's much greater corruption in the private sector than in the public sector, because in the public sector we have this little thing called 'oversight'. There's still a lot of corruption in the public sector...but the difference is that in the first-world nations you actually hear about it in the press. In the third world, pointing out corruption by anyone can get you killed.
So you're going to have corruption wherever you live, Christine - your only choice is where you choose to live, for there are different levels of corruption. At least in first-world nations you can shine the light of day on corruption, and it becomes less than it would be otherwise.
But of course that doesn't apply in America now, thanks to something called Citizens United which now also applies to state and local elections. YOUR people did this, Christine. YOUR people made it legal for corporations to sink all the money they want to get the politicians they want, on the federal, state, and local levels. Gee, aren't you proud of that?
2 - Igor
"But it's an ill wind blaws naebody gude." said Sir Walter Scott, the popular novelist.
So it is. The clever entrepreneur sees the Chinese price cut as an opportunity to load up on cheap PV panels at about $1/watt as opposed to the $4 that they cost very recently. In fact, panels are appearing already in the retail market at about $1.30. Perhaps this is a good time to consider large PV farms partly supported by government subsidies, as an alternative to trying to make money from PV manufacturing. That seems to be the German strategy, as German PV makers go broke while PV usage grows quickly. On one weekend last month Germany derived half of their electric power from domestic PV farms.
If the Chinese want to subsidise PV farms by providing cheap panels, let them. That's a recurring cost savings whereas the Chinese just make a one-time sale. Of course, the Chinese plan is the simple-minded capital monopoly plan of driving competitors out of the market with cheap prices so they can dominate the market and then dictate high prices, but in the long run it's a losing strategy. I think the Chinese are making a mistake, but they are aping the western capitalist monopoly technique, to their disadvantage.