Colorado Officials Investigate Bankrupt Solar Company
In the latest setback for the renewable-energy sector, the Weld County District Attorney’s Office in Colorado is investigating Abound Solar for possible criminal violations.
Although the District Attorney has yet to file charges, investigators are looking into whether the company engaged in securities fraud, consumer fraud, and bank fraud. Specifically, the District Attorney’s Office is investigating whether Abound Solar misled investors and customers about defects in its solar panels and misled financial institutions when the company sought loans.
In 2010, Abound Solar received a $400 million taxpayer-guaranteed loan from the U.S. Department of Energy (DOE). After the Loveland, Colorado-based company ran through about $70 million of the loan in just nine months, the Energy Department pulled the plug on Abound Solar, citing the firm’s failure to “meet milestones.” As losses piled up, and as the company showed itself unable to compete with cheaper Chinese-made solar panels, Abound Solar declared bankruptcy in the summer of 2012 and laid off its 125 employees. Taxpayers will likely be on the hook for between $40 million and $60 million.
Another Renewable Failure
Abound Solar is the third recipient of an Energy Department loan to declare bankruptcy in just over a year. The other two are California solar panel maker Solyndra and Massachusetts-based Beacon Power, an energy storage company.
Concerned about the mounting cost to taxpayers of Energy Department loans, the House Energy and Commerce Committee launched its own investigation into Abound Solar. In early October, Chairman Fred Upton (R-MI) and two other committee members sent a three-page letter to Energy Secretary Steven Chu seeking information on when DOE knew the company was in trouble.
“Recent reports and publicly available documents indicate that persistent technological problems contributed to Abound’s inability to remain commercially viable and ultimately to bankruptcy,” the three lawmakers wrote. “While documents prepared at the time DOE awarded a conditional commitment to Abound do not mention any technological problems, an engineering report submitted to DOE just two months before DOE closed Abound’s $400 million loan guarantee indicate that Abound’s panels were already experiencing significant efficiency and technological difficulties.”
The lawmakers, whose committee has jurisdiction over the Energy Department, asked Chu to turn over all engineering reports, analyses, and other documents pertaining to the company.
Government a Poor Investor
“Once again, we see why the government makes a bad investor,” said Daniel Simmons, director of state policy at the Institute for Energy Research. “Instead of performing in-depth due diligence, the government ‘invests’ to forward a political agenda, promoting unreliable and noncompetitive renewable energy, at the expense of providing the nation with the affordable energy it needs.”
“When politicians spend money like this, they crow about ‘creating green jobs’ but then blithely ignore the pink slips that follow when the propped-up businesses collapse of their own dead weight,” Simmons explained.
Bonner R. Cohen, Ph. D., (email@example.com) is a senior fellow at the National Center for Public Policy Research.