Yet another alternative energy company financed by taxpayer subsidies has gone out of business, leaving taxpayers on the hook for millions of dollars. Abound Solar, which specialized in high-tech solar panels, benefited from a $400 million dollar federal loan guarantee but announced on June 28 it would be filing for bankruptcy. The Department of Energy cut off the guarantee at $68 million last September, roughly the same time solar equipment manufacturer Solyndra went under in another high-profile bankruptcy.
Can’t Compete with Chinese
Abound Solar planned to produce solar panels using the chemical cadmium telluride, which the company claimed would be less expensive than competing crystalline silicon technology. Nevertheless, silicon panels made in China remain less expensive than anything Abound Solar can produce in the foreseeable future, sending the company into bankruptcy.
“Aggressive pricing actions from Chinese solar panel companies have made it very difficult for an early stage startup company like Abound to scale in current market conditions,” the company explained in a press statement.
Picking Winners and Losers
Critics of the federal loan guarantee program for alternative energy companies say government officials should have foreseen the repeated failure of subsidized companies.
“One of the most important things free markets do is weed out companies that can’t perform,” said Daniel Simmons, director of regulatory and state affairs at the Institute for Energy Research. “Yet the federal government has tried time and time again to outsmart the market. Once again government has failed and squandered taxpayers’ dollars in the bargain,” Simmons said.
The U.S. Department of Energy refused to acknowledge the subsidies are a bad idea.
“America must continue playing to win in the clean energy race,” DOE argued in a statement sent to Environment and Climate News. “We need not allow our dependence on foreign oil to be followed with a dependence on foreign solar panels and wind turbines. Instead, we can and must fight to ensure that the next generation of solar panels is invented in America by American innovators, built in America by American workers, and sold around the world.”
Abound Solar, based in Loveland, Colorado, will lay off 125 employees.
“This just underscores how ridiculous this program is,” said Rep. Jim Jordan (R-OH), chairman of the House Subcommittee on Regulatory Affairs, Stimulus Oversight, and Government Spending.
“Our government is not good at picking winners and losers in the marketplace but has certainly proved it is good at wasting taxpayer dollars,” Jordan added. “The Committee noted that this level of risk is unacceptable for taxpayers.”
“As companies like Abound and Solyndra show, the federal government has no business guaranteeing loans,” said Simmons.
Alyssa Carducci ([email protected]) writes from Tampa, Florida.