Abound Solar was doomed by Chinese subsidies that helped flood the market with solar panels, former company executives said on Wednesday as Republicans delved into the latest failure of a government-backed solar panel manufacturer.
The collapse of Abound and the high-profile bankruptcy of Solyndra, another solar panel maker that also received a government loan guarantee, have provided rich fodder for Republicans on the campaign trail attacking the Obama administration's energy policies.
Abound Solar filed for bankruptcy earlier this month, succumbing to intense competition from China that has sharply driven down the cost of solar panels, said Thomas Tiller, who served as Abound's chairman.
Tiller said the Chinese government provided about $35 billion in subsidies to Chinese solar companies, resulting in sharp growth in production capacity that outpaced demand and pushed down the price for panels by more than 50 percent in just a year.
"Such a severe market change made it difficult for Abound and others to survive," he said in remarks prepared for a House of Representatives oversight committee hearing.
Prior to filing for bankruptcy, Abound received about $70 million of a $400 million loan guaranteed by the U.S. Energy Department.
The drop in the solar panel price was bigger than the Energy Department and other experts expected at the time the Abound loan was finalized, David Frantz, acting executive director of the department's loan program, said in prepared testimony.
The decline in polysilicon costs made Abound's cadmium telluride thin-film panels unprofitable, Frantz said. To protect taxpayers, the department stopped its funding in August 2011 when Abound began missing agreed financial milestones.
DEFENDING LOAN PROGRAM
Jonathan Silver, the venture capitalist tapped to ramp up the Energy Department's loan guarantee program, staunchly defended the Obama administration's record.
"The funds represented by investments that have failed represent less than 3 percent of the total portfolio," Silver said in written testimony for the House committee hearing.
"This is a record the private sector would consider remarkable, but is particularly impressive for a portfolio of technologically innovative projects being built at commercial scale for the first time anywhere," said Silver, who is now a visiting fellow at the Third Way think tank.
Silver left the Energy Department last October after the loan guarantee program doled out the last of its funding from the stimulus act of 2009, and as Republicans stepped up their probe into the failure of Solyndra, which received $500 million in federal funding.
Silver joined the department after the Solyndra guarantee was awarded, but he was in charge when the government agreed to restructure the debt as the company ran out of cash.
Frantz also strongly defended the administration's management of the loan program.
"The troubles of some segments in the solar manufacturing market should not overshadow the great work that the department's loan programs have done to date, or the need to continue to find ways to support clean energy deployment in this country," Frantz said.