Abound Solar, a green start-up that is facing stiff competition from Chinese solar-panel manufacturers, announced this week that it would be laying off 180 of its 400 employees, despite having received a $400 million loan from the Department of Energy. According to an ABC News story, though, this announcement does not come completely out of the blue. A month before Abound’s announcement:
The House Committee on Oversight and Government Reform asked Energy Secretary Steven Chu to explain how the solar panel manufacturer had qualified for the loan after the ratings firm Fitch had determined the company would make a “highly speculative” investment.
“Fitch describes Abound as lagging in technology relative to its competitors, failing to achieve stated efficiency targets, and expecting that Abound will suffer from increasing commoditization and pricing pressures,” wrote Rep. Darrell Issa, R.-California, the committee chairman. “DOE’s willingness to fund Abound, despite these concerns, calls into question the merits of this loan guarantee.”
Issa’s letter to Chu, dated January 30, came just weeks before the company announced it would lay off 180 of its 400 workers.
This might sound eerily similar to the story of Solyndra, but:
It remains way too early to determine whether Abound is poised to follow the trajectory of the best-known solar manufacturer to receive a sizeable government loan – Solyndra . . .
Abound’s chief executive, Craig Witsoe, told ABC News he hated “to see politicians [comparing Abound to] Solyndra to score political points.”
“Obviously, any big failure like that, a lot of people don’t know the details of the different technologies,” he said. “Our technology is very, very different from Solyndra. Solyndra didn’t have a competitive, cost-effective technology. Our strategy is to create a most cost-effective solar module.”
On the other hand, much like Solyndra, Abound Solar had only the highest-quality, most efficient next-generation political connections:
Issa’s letter . . . also inquires about the company’s political ties to the Obama administration. Namely, Issa notes that a major investor in Abound Solar, the Bohemian Companies, is run by Pat Stryker.
Forbes puts Stryker’s net worth at more than $1.3 billion, and Stryker has donated nearly $500,000 to Democrats in the past five years, including $50,000 to Obama’s inaugural fund and $35,800 to his victory fund, according to the Center for Responsive Politics.
A message left at Stryker’s office in Colorado has not been returned.
However, Abound has introduced significant innovations on the Solyndra business model. They have developed similarly strong relationships with Republicans and received
strong backing from Republicans in Indiana . . . The state’s GOP governor, Mitch Daniels, even supported an $11.85 million tax credit for the firm. Energy officials also said that two Abound investors were major Republican donors who have given more than $100,000 to Republicans in the last few years.
DOE spokesmen insist that “the decisions made by loan officials were based on the merits, and never on political considerations.” Even if that’s true, Abound’s story shows how hard it is for governments to get involved with venture capitalism and avoid deals that can be interrupted as corrupted, or corrupting.
— Nash Keune is a Thomas L. Rhodes Journalism Fellow at the Franklin Center.