U.S. solar-power firm Abound Solar said Wednesday it will stop making solar panels while it retools a Colorado factory as part of a project backed by $400 million in federal loan guarantees.
The company has laid off 280 employees and delayed plans to open a new factory in Indiana that was also part of the government-backed deal.
The announcement was the latest sign of trouble for a manufacturing company backed by the Department of Energy’s loan guarantee program, which has already lost more than $500 million on loans to failed California solar panel maker Solyndra LLC.
Energy Secretary Steven Chu said Tuesday he felt the department would have more than enough reserves to cover future losses on the loan program. So far, Abound has drawn down about $70 million of taxpayer-guaranteed funds.
Abound’s Chief Financial Officer Steve Abley said the company decided to shut down its two manufacturing lines in Colorado and upgrade the equipment to make a new solar panel that converts more sunlight into electricity–a project that could take about six to nine months. The company had previously planned to upgrade the lines one at a time to allow continued production.
The company decided that it made more economic sense to cut production while it upgrades the factory, rather than sell its panels below the cost of production, as other solar firms are doing, Abley said.
“The way the solar market is today, everything everyone is making they’re selling below cost,” Abley said in an interview. “Not just small guys like us; substantial Chinese manufacturers are selling below cost. They can’t do it for a sustainable period and we can’t either.”
Abley said his company has a different technology than Solyndra that is “much lower cost.”
The Department of Energy agreed to a delay in Abound’s schedule for upgrading the Colorado and Indiana facilities, Abley said. He declined to provide details, but said the department was “well aware of what we’re doing” and has been “very supportive.”
Abound won the $400 million loan guarantee from the Obama administration in December 2010 to expand a Longmont, Colo., solar manufacturing facility and to build a new factory in Tipton, Ind.
Here’s the issue. If the company has only drawn down $70 million of its loan, why is the DOE still allowing it to draw down on the remaining $330 million? If the government is going to play venture capitalist, then at least do it intelligently. The DOE should pull the $330 million that is reportedly left on the loan and return it to the program.