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The End of Abound Solar: What Have We Learned?

The sad news on July 2nd 2012 was that 125 employees were being laid off at the Abound Solar factories in Colorado. Abound listed assets at $100 million and liabilities of $500 million in the bankruptcy filing. The final auction of the equipment assets was performed this past week.

I feel fortunate to have visited Dr. W.S. Sampath's Cadmium Telluride (CdTe) photovoltaic (PV) manufacturing laboratory at Colorado State University in February 2005.  At that time the laboratory was depositing CdTe PV materials onto 16” X 16” glass panels. That soon became AVA Solar Incorporated in Fort Collins, January 2007;  they announced their first round of funding on February 8, 2007. AVA then became Abound Solar in March 2009, and announced they were building a new factory in Indiana in July of 2010. Between September 2009 to January 2012 Abound’s modules increased in performance from 50 watts to 80 watts on their standard 2’ x 4’ panels. (Video: Hallway of framed accomplishments at Abound). This was an exciting technology, at an exciting time when huge amounts of investments were being made in PV manufacturing technologies.

The People

Keith Nichols, Director of Facilities Engineering at Abound exemplified the mentality of Abound's early days when he told me, "We were going to change the world".  Veterans from all over the PV industry are intimately familiar with the feeling. 

Some of the former Abound Solar people were at the auction, purchasing testing equipment and reinventing themselves as new northern Colorado companies marketing PV reliability services. A small number of other former employees with intimate knowledge of the sold equipment will be hired by the companies who purchased the salvaged gear for pennies on the dollar. Colorado may become known as one of the best knowledge bases for PV system performance services in part because of the experience developed at Abound Solar.

The Gear and Auction

With the Abound facility open for inspection, it was interesting to see one blackboard showing the day to day plans for the manufacturing floor. The chance to implement these were never realized.

In hindsight, perhaps Abound should have teamed with a glass factory.  This would have helped the process and reduced glass breakage. The complicated CdTe line was not a turnkey system, it was pieced together from various company machines and glass handling automation. And it was in-line so any bottlenecks would slow or shut down a production line. This inevitably creates integration challenges as processes were improved, and requires extensions in time to solve unforeseen issues. Time was not an option in today’s PV industry with rapidly dropping module prices.

video of the various equipment pieced together for the full thin film manufacturing shows ATS Automation (TSX:ATA), Cardinal (S-Corp), Von Ardenne, and other glass handling equipment making up the very long manufacturing process.  A closer video look at Abound second CdTe line shows previously unavailable information, due to confidentiality, but now is a publicly available understanding of the Abound CdTe tools and  process.

The companies who lost financially due to this bankruptcy are those that teamed with Abound including ATS, Cardinal, Von Ardenne, companies making racking, inverters and installation companies betting on Abound’s future sales. Anyone owning an Abound PV system are now owning the warranty risk, as well as any recycling of the CdTe promised by Abound for the end of the system life. The CdTe technology requires proper collection and recycling through programs like those offered by PV Recycling.

Cardinal was at the auction, trying to buy back their own materials, for which a Cardinal representative said they had not yet been paid. 8,000 pieces of Cardinal tempered glass was sold on the web for $2,500.

One example of the discounts available at this auction was a piece of Von Ardenne sputter equipment that originally cost $5 million and sold at the auction for $300,000. Representatives from Singapore bought what appeared to be one complete CdTe PV manufacturing line from the auction. The results from the auction should become publicly available at which time they will be posted in the comments section of this article at altenergystocks.com.

Where was General Electric (NYSE:GE)? 

Back in April 2011, I wrote an article titled “The Cadmium Telluride Solar Factory Race" describing the horse race of thin film CdTe companies competing in the PV space. At that time, it was First Solar (NASD:FSLR)  to win, Abound to place and General Electric to show (first, second and third place in horse racing terms). Abound and GE Solar were basically a photo finish for last place. On July 3rd of this year I helped break the news that GE Solar was laying off employees in Colorado.

GE seemed missing from the public Abound auction. Why didn’t they buy-out Abound at bankruptcy?  The gear would be very similar as what GE Solar/Primestar uses, and the intellectual property would be available to GE Solar. Instead the Abound equipment was sold piece by piece at auction this past week. To me this says "GE is not serious about manufacturing CdTe" or they would have been at the table purchasing specific process or support equipment. It is possible that they were hidden on the web during the auction, but they were not evident at the onsite auction. Perhaps GE doesn’t think that Abound's intellectual property or manufacturing equipment was good enough to produce profitable CdTe PV in the current price environment.  

Lessons Learned

Investors can learn from this Abound Solar experience.  When analyzing future investments be looking for signs that people are being too optimistic about the company, the technology, the competition, and the market opportunities. Many US PV module manufacturer bankruptcies are claiming low international prices as major reasons for their downfall. PV module prices have historically reduced in prices based on the well known logarithmic experience curve (see SunShot Grand Challenge: The SunShot Swerve by Ed Gunther; a September 2012 Bloomberg version is also available). In the past two years, PV module prices have reduced in price per watt more than expected; possibly because the increased experience was more than expected. "We were going to change the world" became “The solar industry has changed the world even faster than most solar companies could handle." The bankruptcies of Abound Solar, Evergreen SolarUnited Solar, Solyndra and others are part of this world-wide-learning-curve that will continue to reduce PV modules prices.

The book “Thinking, Fast and Slow ” by the Nobel Prize winning economist Daniel Kahneman describes how emotionally-charged-investment-decision-making is fraught with challenges.  “We were going to change the world" was in hindsight too passionate. In only a few years, solar has changed the energy industry with low cost PV panels now replacing conventional sources of energy. Using experience curves, the lower priced PV modules were predictable, but not to the extend the current module prices of $0.60-$0.70 per watt discussed at the recent Solar Power International conference held in Orlando. The good news is that at these prices, there will be more and more opportunities for low cost PV system installations, more experience in the PV technology, with the positive feedback loop continuing to reduce system prices. The market becomes bigger and bigger with every drop in module and system level pricing. We are changing the world, and Abound Solar has been a part of that change.

This Abound Solar experience has helped the PV industry by investigating new technologies with specific advantageous over conventional technologies. The lesson of Abound is not that it’s impossible to change the world.  Changing the world is possible... but the new world is not always what we expected.

Disclosure: No positions.

Photos and Videos by author.

This article was originally published on AltEnergy Stocks and was republished with permission.

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