New York -- Abound Solar Inc., a U.S. solar manufacturer that was awarded a $400 million U.S. loan guarantee, will close its doors and file for bankruptcy because its panels were too expensive to compete with Chinese products, according to the U.S. Energy Department.
Abound, based in Loveland, Colorado, borrowed about $70 million against the guarantee, the Energy Department said today in a statement. Calls to Abound executives weren’t returned today.
The failure would follow that of Solyndra LLC, which shut down in August after receiving a $535 million loan guarantee from the same Energy Department program. Abound stopped production in February to focus on reducing costs after a global oversupply and increasing competition from China drove down the price of solar panels by half last year.
“When the floor fell out on the price of solar panels, Abound’s product was no longer cost competitive,” Damien LaVera, an Energy Department spokesman, said in a statement on the agency’s website. [Editor's note: View LaVera's complete article — with excellent solar market analysis — here.]
U.S. taxpayers may lose as much as $30 million on the loan after Abound’s assets are sold and the bankruptcy proceeding closes, he estimated.
“This is not surprising at all,” Anthony Kim, an analyst at Bloomberg New Energy Finance in New York, said today in an interview. “They were trying to sell to a competitive, over- supplied market with limited production. That keeps costs high.”
Abound was awarded the loan guarantee to build two factories to make thin-film panels using cadmium telluride. It completed one plant, in Longmont, Colorado, and never began construction on the second, which was planned for Tipton, Indiana.
The Energy Department has provided almost $35 billion in loans, loan guarantees and conditional commitments to renewable energy companies. About 35 percent of that is for solar-generating projects, which benefit from falling panel prices, compared with less than 4 percent for solar manufacturers, according to LaVera.
Besides Abound and Solyndra, two other solar manufacturers received loan guarantees. 1366 Technologies Inc. won approval to borrow as much as $150 million to produce polysilicon forsolar panels and SoloPower Inc. was awarded a $197 million guarantee to make rolls of flexible solar panels using a copper-indium- gallium-selenide composite.
Copyright 2012 Bloomberg.