For the last two and half years, the Independence Institute along with other free market energy policy advocates have pounded the drum of transparency and exposed the federal government’s infamous Department of Energy (DOE) loan guarantee program that rewarded the politically well-connected while costing taxpayers billions of dollars with high profile bankruptcies such as Solyndra and Colorado’s own Abound Solar.
Without the work of the Independence Institute’s investigative reporter Todd Shepherd, the Energy Policy Center, and Michael Sandoval now with the Heritage Foundation, Abound Solar’s history is little more than a footnote in failure in the grand scheme of the DOE. We covered it. The mainstream media did not…until we shamed them into doing so.
Now the Government Accountability Office (GAO) has released a report on its audit of the DOE loan guarantee program that finds negative publicity surrounding the embattled program has left billions of taxpayer dollars untouched in the public trough.
More than $51 billion in unused loan guarantee authority and $4.4 billion in unused credit subsidies…remain available under the DOE’s Loan Guarantee Program (1703) and Advanced Technology Vehicles Manufacturing (ATVM) loan program.
According to the report,
Some applicants noted that the Solyndra default and other problems have created a negative public image and political environment for the program, which has made its future less certain and the DOE more cautious about closing on loan guarantees.
Good news for taxpayers, the DOE has not closed a loan since September 2011, the month that Solyndra shuttered its doors. The GAO conducted the performance audit beginning in June 2012 (the date Abound Solar went bankrupt) to February 2013.
Most impressive is that taxpayers are making their voices heard and companies themselves are feeling the negative public pressure of socializing risk while privatizing profit:
“Most applicants and manufacturers noted that public problems with the Solyndra default and other DOE programs have also tarnished” other programs such as ATVM. They believed the negative publicity makes the DOE more risk-averse or makes companies wary of being associated with government support.”
We would be remiss if we didn’t mention by name the excellent work of Paul Chesser of the National Legal and Policy Center exposing the DOE’s corporate welfare program for Big Green projects such as electric vehicle manufacturers to the stars Fisker and Tesla and battery maker A123 Systems.
By William Yeatman and Amy Oliver Cooke
As Coloradans we thought we might have to apologize to the rest of the country if President Barack Obama nominated former one-term Colorado Governor Bill Ritter to head the Energy Department. If the President wanted to make electricity costs skyrocket and the eco-left community happy, Ritter was his guy, but the President didn’t pick him.
Despite his dense résumé and desire to cut emissions, however, Moniz can be a polarizing figure in scientific and environmental circles. Few experts deny the value of a scientist as DOE chief, but many fans of renewable energy worry about Moniz’s gusto for natural gas and nuclear power — not to mention his financial ties to the energy industry.
‘We’re concerned that, as energy secretary, Ernest Moniz may take a politically expedient view of harmful fracking and divert resources from solar, geothermal and other renewable energy sources vital to avoiding climate disaster,’ Bill Snape of the Center for Biological Diversity said in a recent press release. ‘We’re also concerned that Moniz would be in a position to delay research into the dangers fracking poses to our air, water and climate.’
And the Washington Post reports:
But over the past couple of weeks, many environmentalists and some prominent renewable energy experts have tried to block the nomination of Moniz because of an MIT report supporting “fracking” — as hydraulic fracturing is commonly known — and because major oil and gas companies, including BP, Shell, ENI and Saudi Aramco, provided as much as $25 million each to the MIT Energy Initiative. Other research money came from a foundation bankrolled by shale gas giant Chesapeake Energy.
‘We would stress to Mr. Moniz that an ‘all of the above’ energy policy only means ‘more of the same,’ and we urge him to leave dangerous nuclear energy and toxic fracking behind while focusing on safe, clean energy sources like wind and solar,’ Sierra Club executive director Michael Brune said in a statement Monday.
The Sierra Club doesn’t have much credibility because financially it was sleeping with the enemy, having taken $26 million from Chesapeake Energy to destroy the market for coal. One place they enjoyed great success was in Colorado with HB 1365, the fuel switching bill and cornerstone of Ritter’s “New Energy Economy.”
Governor Ritter coined the term New Energy Economy for his signature agenda. In practice, his New Energy Economy entails three policies: (1) a Soviet-style green energy production quota; (2) subsidies for green energy producers; and (3) a mandate for fuel switching from coal to natural gas. Renewable energy is more expensive than conventional energy, and natural gas is twice as expensive as coal in Colorado, so these policies inherently inflated the cost of electricity.
Last month, the Independence Institute published the first ever line item expensing of Ritter’s energy policies, and the results were shocking. In 2012, the New Energy Economy cost Xcel Energy (the state’s largest investor-owned utility) ratepayers $484 million, or 18 percent of retail electricity sales.
This princely sum purchased the equivalent of 402 megawatts of reliable capacity generation. By comparison, Xcel had a surplus generating capacity (beyond its reserve margin) in 2012 of 700 megawatts—almost 75 percent more than the New Energy Economy contribution. Thanks to Governor Ritter’s energy policies, Xcel ratepayers in Colorado last year paid almost half a billion dollars for energy they didn’t need.
In addition to implementing expensive energy policies, Governor Ritter also has experience picking losers in the energy industry. In May 2009, Governor Ritter hand-delivered to Secretary Chu a letter in support of a $300 million loan guarantee for Colorado-based Abound Solar, a thin-filmed solar panel manufacturer. In the letter Ritter claimed Abound would “triple production capacity within 12 months, develop a second manufacturing facility within 18 months and hire an additional 1,000 employees.”
Taxpayer money couldn’t keep Abound afloat, which never reached production capacity. After its solar panels suffered repeated failures, including catching fire, Abound declared bankruptcy in early 2012 leaving taxpayers on the hook for nearly $70 million and even more at the state and local level. A former employee explained, “our solar modules worked so long as you didn’t put them in the sun.”
Abound Solar wasn’t the only pound-foolish Stimulus spending associated with Governor Ritter. During his administration, the Colorado Energy Office’s coffers swelled with almost $33 million in stimulus subsidies for weatherization efforts. According to a recent report by the Colorado Office of State Audits, the Ritter administration failed to even maintain an annual budget for the program. As a result, the audit was unable to demonstrate whether the money had been spent in a cost effective manor. All told, the auditor found that the energy agency could not properly account for almost $127 million in spending during the Ritter administration.
Ritter told the Fort Collins Coloradoan that the scathing audit accusing the agency under his watch of shoddy management practices was not the reason the President passed over him for Energy Secretary.
The former Governor is especially proud of the job creation associated with the New Energy Economy. To be sure, throwing taxpayer money at any industry would create jobs. The problem occurs when the public money spigot runs dry. In this context, an October 22, 2012 top fold, front page headline in the Denver Post is illuminating: “New energy” loses power; A series of setbacks cost over 1,000 jobs and threatens the state’s status in the industry. To put it another way, in the two years since Ritter left office, his New Energy Economy has atrophied in lockstep with the reduction in public funding.
Ritter has taken to proselytizing for the gospel of expensive energy. He founded the Center for the New Energy Economy, the purpose of which is to, “provide policy makers, governors, planners and other decision makers with a road map that will accelerate the nationwide development of a New Energy Economy.” He even brought with him the former head of the beleaguered energy office Tom Plant to work for him as a “policy advisor.”
So far Ritter’s bad energy policy has remained largely within the Centennial State, and, for now, that’s where it will stay. With the choice of Moniz, the rest of the country can breathe a sigh of relief. For Coloradans, we’re still stuck with him.
William Yeatman is the Assistant Director of the Center for Energy and Environment at the Competitive Enterprise Institute and a policy analyst for the Independence Institute in Denver, Colorado. Amy Oliver Cooke is the Director of the Energy Policy Center for the Independence Institute
By Syndi Nettles Anderson, guest writer for the Independence Institute Energy Policy Center
Earlier this week Todd Shepherd of Complete Colorado reported that before thin-filmed cadmium-telluride solar panel manufacturer Abound Solar declared bankruptcy it was the subject of a Colorado Department of Public Health and Environment (CDPHE) investigation after an anonymous tip raised concerns about cadmium contamination.
Shepherd provided documents showing that the now abandoned Weld County plant produced monthly 630 pounds of highly toxic cadmium waste that was shipped to Deer Trail in Arapahoe County for storage.
Because of the recent interest in cadmium, below is a primer on the rare earth element used in so many products besides solar panels.
Cadmium, one of the 17 rare earth elements (REE), is a soft silver-grey metal, commonly found in ores containing zinc. Products that use significant cadmium include rechargeable batteries, solar cells and protective steel coatings. Recently cadmium has been priced about a dollar per pound.
Cadmium is a byproduct when zinc is refined from zinc ore, or recycled from nickel-cadmium rechargeable batteries. The largest producers of cadmium are China, South Korea, Japan and North America. The concentration of cadmium in the earth’s crust is between 0.1 and 0.5 parts per million (ppm). This is about one hundred times more common than gold.
Cadmium is very useful in rechargeable batteries and solar cells. In the U.S., about 27 percent of cadmium-nickel batteries are recycled, which requires batteries to be taken apart.
However, cadmium is also very poisonous. Exposure is most dangerous when breathing in dust or vapors containing cadmium. Other methods of exposure are also dangerous, as cadmium can be absorbed through the skin or by ingestion.
People can absorb cadmium through inhalation, absorption or by eating it. The cadmium is transported through the body by blood cells and plasma. Cadmium goes into the kidneys, resulting in kidney failure. Before toxic levels are reached, kidney function will start to deteriorate. Generally a third to half of the cadmium that is in a body will be found in the kidneys. Cadmium will also move to the liver and muscles. In the liver, the half-life of the cadmium is 5-15 years, in the muscles-30 years and in the kidneys 10-30 years.
During ore smelting processes, cadmium is released into the air. It may also be released into the atmosphere by burning cadmium-containing garbage. Cadmium exposure can cause throat and lung irritation. Lower levels of exposure also cause shortness of breath, and with prolonged exposure resulting in bronchiolitis and emphysema with lung damage, bloody coughing, and accumulation of fluids in the body. One highly concentrated exposure can cause lifetime damage to lungs. 
Metal fume fever can be caused by inhaling cadmium during the welding and metal heating processes of older silver solder. Metal fume fever can cause flu like symptoms with fainting, sore throats, coughs, and headaches. Working with cadmium requires extremely well ventilated areas, respirators, and extreme care. Regular blood and urine checks are required to monitor the amount of cadmium that can get into the body. 
Phosphate fertilizers, sewage sludge and contaminated water can deposit cadmium into food sources. Growing rice and wheat can absorb Cadmium. Large ocean fish can also take up a lot of cadmium. Smokers also intake cadmium into their bodies and have about double the cadmium levels that non-smokers have. Cadmium is associated with breast cancer, lung cancer, prostate cancer, heart disease, and kidney dysfunction. 
As a result of the increased awareness of the danger of cadmium to humans, the EPA released a new report December 3, 2012, expanding the regulations and proposing new regulations regarding cadmium.
This final rule requires manufacturers (including importers) of cadmium or cadmium compounds, including as part of an article, that have been, or are reasonably likely to be, incorporated into consumer products to report certain unpublished health and safety studies to EPA. 
Occupational Safety Health Association (OSHA) also highly regulates workers contact with cadmium stating,
Cadmium and its compounds are highly toxic and exposure to this metal is known to cause cancer and targets the body’s cardiovascular, renal, gastrointestinal, neurological, reproductive, and respiratory systems.
Requirements to protect workers from cadmium exposure are addressed in specific OSHA cadmium standards covering general industry (1910.1027), shipyards (1915.1027), construction (1926.1127) and agriculture (1928.1027).
In conclusion, Cadmium is critical to the solar cell and rechargeable battery industry but extreme care must be taken to prevent cadmium from getting into the air, water or plant life. Cancer, lung damage and kidney failure are real risks for cadmium exposure.
 Wilburn, D.R., 2007, Flow of cadmium from rechargeable batteries in the United States, 1996-2007: U.S. Geological Survey Scientific Investigations Report 2007–5198, 26 p., available at http://pubs.usgs.gov/sir/2007/5198/.
 Common environmental contaminant, cadmium, linked to rapid breast cancer cell growth. ScienceDaily. Retrieved February 14, 2013, from http://www.sciencedaily.com /releases/2012/04/120423184203.htm
American Association for Cancer Research (AACR) (2012, March 15). Dietary cadmium may be linked with breast cancer risk. ScienceDaily. Retrieved February 14, 2013, from http://www.sciencedaily.com /releases/2012/03/120315094506.htm
Cell Press (2012, September 12). Studies shed light on how to reduce the amount of toxins in plant-derived foods. ScienceDaily. Retrieved February 14, 2013, from http://www.sciencedaily.com /releases/2012/09/120912125517.htm
The Independence Institute’s Todd Shepherd, along with this blog, have spent two years covering, and ultimately exposing, what is now the Abound Solar scandal. Understandably, much of the focus is now on Weld County District Attorney Ken Buck’s criminal investigation as well as a Congressional Oversight Committee inquiry into the bankrupt solar panel manufacturer.
Recently released emails on Complete Colorado indicate that, despite statements to the contrary, the White House politicized the Department of Energy (DOE) loan guarantee process for politically well-connected Abound.
But something else within those emails caught my attention reminding me of free market economist and Nobel Prize winner Milton Friedman’s famous quote, “there is no such thing as a free lunch.” In other words, even things that appear to be free have an associated cost.
This basic economic concept is lost on Colorado State Representative Max Tyler’s (D-Lakewood) who in a March 23, 2010, press release bragged about a government-dictated increase in Colorado’s renewable energy mandate:
With HB 1001 we will manufacture and install panels and turbines all over Colorado to capture free energy….The sun will always shine for free, the winds will always blow for free, and our energy production will be cleaner. Renewable energy, green jobs, and a cleaner future — what’s not to like?
At roughly the same time that Tyler publicly fantasized about “free energy,” a credit advisor for the Department of Energy (DOE) loan guarantee program James McCrea was concerned about “major issues” with Abound Solar’s marketability. In an email dated April 1, 2010, just seven days after Tyler’s press release, McCrea explained:
Another issue is the very limited supply of telluride, its potential price trajectory and other demands for it. Related to this is a question of the viability of the Abound panels as compared to other panels and whether there is sufficient benefit to allow the panels to be profitable if Te [telluride] prices really increase. If the price really rises will there be alternative uses that can afford it basically turning it into a non available input for Abound?
I don’t believe we have ever worked with an input material that is so limited. We need to think that through carefully.
Before going bankrupt this summer, Abound produced cadmium telluride (CdTe) thin-filmed photovoltaic solar panels. Cadmium and tellurium, used in the manufacturing of Abound’s panels, are two of the world’s 17 “rare earth elements” that are needed for everything from smart phones to solar panels to high tech weapons systems. My former colleague Michael Sandoval, now an investigative reporter with the Heritage Foundation, and I have written several columns on general issues with rare earth elements.
This email highlights the problem specific to Abound, and McCrea was right to be concerned. According to the December 2011 DOE Critical Materials Strategy the price of tellurium has been going up since 2007:
The price dropped in 2006, but in 2007 resumed its upward trend owing to increased production of cadmium telluride (CdTe) solar cells.
Furthermore, China controls the vast majority of rare earth elements. In August 2012, the Chinese announced an ambitious plan to increase its stranglehold on the world’s available supply of rare earths. According to China Daily the country:
launched a physical trading platform for rare earth metals as part of its efforts to regulate the sector and strengthen its pricing power for the resources.
As the world’s largest producer of rare earth metals, China now supplies more than 90 percent of the global demand for rare earth metals, although its reserves account for just 23 percent of the world’s total.
The article reiterated what Michael and I have said on numerous occasions, mining rare earths comes with a significant environmental cost that green zealots like Tyler completely ignore when claiming solar energy is free and clean:
Mining the metals greatly damages the environment. In recent years, China has come down heavily on illegal mining and smuggling, cut export quotas and imposed production caps, stricter emissions standards and higher resource taxes to control environmental damage and stave off resource depletion.
However, these measures have irked rare earth importers, who complained about rising prices and strained supplies.
But China did exactly what it said it would do in 2009. It drove up prices with reduced output as global demand increased.
China’s rare earth output fell 36 percent year on year to 40,000 tonnes in the first half of the year. Prices of major rare earth products in July remained twice as high as prices at the beginning of 2011, although down from the beginning of the year.
In July 2009, about a year before President Barack Obama announced a $400 million loan guarantee for Abound, Jack Lifton, an expert on sources and uses of rare minerals, wrote a lengthy article for Resource Investor about the availability of tellurium for First Solar, a global leader in cadmium telluride solar panel manufacturering. Lifton’s conclusion should have served as a prophetic warning for Abound and any hope of profitability:
A company such as First Solar, which is critically dependent on a secure supply of tellurium to exist and on an unsustainable growth in the supply to it of tellurium for it to grow and achieve competitive pricing is a big risk for short-term investors. The maximum supply and production levels attainable of tellurium are quantifiable even if the actual production figures are murky, and they do not bode well for the future of First Solar if it must make profits to survive.
The next time you hear a politician like Max Tyler tout the benefits of “free” and “clean” energy, remember Abound Solar because there is no such thing as a free lunch.
Instead of figuring out what happened to your tax dollars with the bankrupt Colorado-based Abound Solar (leaving that to Congress and the Weld County District Attorney Ken Buck), the Department of Energy continues to be the PR firm for the Big Green agenda by promoting energy themed pumpkin carving patterns. Give them credit for including nuclear, but noticeably absent are any patterns for coal, natural gas, and oil, which are the sources for most of the power that Americans demand.
For those kiddos who want to carve pumpkins this Halloween, you can really spook trick-or-treaters with a solar panel or CFL themed jack-o-lantern. The smart kids will carve carbon-based energy sources because they know that affordable, reliable, and abundant energy is what powers our economy.
GIGAOM reports that, as of last week, General Electric is putting on hold its plan to be a major solar panel manufacturer in Colorado. According to the self-described emerging technology blog GIGAOM:
General Electric was set to become a major solar manufacturer when it announced a 400 MW factory in Colorado last year. Over a year later, though, it’s putting that plan on hold for 18 months or more while it works on coming up with a more competitive technology, Danielle Merfeld, general manger of solar technology at GE, told us on Tuesday.
It was only last month when a company spokeswoman told me by email that GE was still building its factory and hoping to start production in 2013. But the company reconsidered that plan in recent weeks after seeing solar prices tumbled significantly for over a year, and it stopped the factory building activities last week, Merfeld said.
When GE announced it was getting into the solar panel manufacturing business, several states chased after GE’s $300 million project and the promise of 355 green jobs with an average salary of $50,000. Colorado, specifically Aurora, landed the project after granting $28 million in state and local tax incentives. A glowing Denver Post house editorial from October 2011, called it a “coup,” explaining that “a growing green-energy sector in Colorado is a plus as the nation continues to confront issues of climate change and energy independence.”
Sounding like a broken record (for those who still remember vinyl), but we saw this coming in November 2011 when we predicted dark days ahead for solar manufacturers following layoffs from a Detroit based manufacturer .
A local news outlet, WOOD-TV, had the money quote: ”supply for solar products worldwide is more than double the demand, so there is no need to make more.”
This is bad news for Colorado because taxpayers just threw a bunch of incentives at General Electric to locate a solar panel manufacturing plant in the state. Colorado already has several solar panel manufacturers including Abound Solar, Ascent Solar, and PrimeStar.
While losing a competitor might be good for the remaining manufacturers, an over-saturated market means more dark days on the horizon for solar panel manufacturers and thus for taxpayers.
Since November 2011, Abound has declared bankruptcy, GE has pulled the plug on the PrimeStar project, and Ascent has moved away from panels and into new consumer solar products such as cell phone chargers.
Former Governor Bill Ritter’s green dream for Colorado is turning into a nightmare for taxpayers. The question remains how long can Ritter sustain his own $300,000 job as the green ambassador for Colorado’s New Energy Economy, which appears to be the only real job “created.”
A mere seven months ago, the Denver Business Journal quoted Abound Solar President and CEO Craig Witsoe bragging that his thin-filmed cadmium telluride solar panel manufacturing company was the “anti-Solyndra,” referring to the scandalous and abrupt bankruptcy of the California-based thin-filmed manufacturer that saw the FBI raid its luxurious taxpayer-supported headquarters.
Cathy Proctor of the DBJ further reported that Abound was “doing well and growing,” according to Witsoe. Proctor also quoted solar industry experts who said Abound had “a good chance of competing in the market” assuming it could lower the cost of its panels.
And Eric Wesoff of GreenTech Media reiterated the Abound as the anti-Solyndra theme, “They’re not Solyndra. Solyndra spent money like a drunken sailor, and it doesn’t seem like Abound is doing that.”
With today’s bankruptcy announcement, Abound turns out to be nothing more than another failed solar manufacturer that got drunk on the promise of sunshine and easy (taxpayer) money.
Pat Stryker’s Abound Solar “will close its doors and file for bankruptcy” next week according to the Department of Energy (DOE) blog. Because the bankruptcy means roughly $70 million in lost taxpayer money, we take no joy in saying that “we told you so.” Back on January 11, 2012, we wrote:
Unfortunately for taxpayers who provided a $400 million loan guarantee for Abound, 2012 may be the year that the sun sets on Pat Stryker’s pet project.
Apparently taxpayers have been venture capitalists invested in Abound Solar since 2007, well before the controversial $400 million taxpayer-guaranteed loan:
In 2007, the Department awarded the company a grant to support a pilot project to demonstrate the viability of its manufacturing process. In December 2010, the Department issued a loan guarantee to support the construction of two commercial scale plants: one in Longmont, Colorado and a second new facility in Tipton, Indiana.
Perhaps Abound should have heeded Ronald Reagan’s warning when he said the nine most terrifying words in the English language are “I’m from the government, and I’m here to help.” John Keyes, founder of the first commercial solar energy corporation, knows this first hand. He explained in an interview that the worst thing to happen to the industry he loves was government involvement which began in the Carter Administration.
Rob Douglas wrote on WatchDog.org that the bureaucratic red tape involved with DOE loans ends up hamstringing businesses like Abound:
For example, the $400 million loan-guarantee agreement between Colorado-based Abound Solar and the DOE reveals that Abound Solar — and, it is safe to assume, all loan-guarantee recipients — had to comply with a staggering range of federal laws and regulations, including, but not limited to:
- The Recovery Act;
- The Davis-Bacon Act; Office of Management and Budget regulations;
- Environmental laws (including those involving “air emissions, discharges to surface water or ground water, noise emissions, solid or liquid waste disposal, the use, generation, storage, transportation or disposal of toxic or Hazardous Substances or wastes, or other environmental health or safety matters”);
- The Investment Company Act;
- The Employee Retirement Income Security Act;
- Buy American regulations;
- Lobbying laws;
- Foreign asset control laws;
- Prohibited person laws;
- Prohibited jurisdiction laws;
- Corrupt practices laws;
- The Anti-Terrorism Order.
Scratch the surface of any one of the above categories and you find requirements like this one, in the OMB compliance section:
“OMB shall have certified in writing (in form and substance satisfactory to DOE) that the DOE Credit Facility Documents and the Project comply with the provisions of the Omnibus Appropriations Act, 2009, P.L. No. 111-8, Division C, Title III, as amended by Section 408 of the Supplemental Appropriations Act, 2009, P.L. No. 111-32.”
Keep in mind that’s just one provision in more than 100 pages of detailed requirements that span the breadth and depth of federal laws and regulations. And in case the loan guarantee agreement by the DOE is not suffocating enough, the following legal, financial and regulatory blanket — as revealed in the Abound Solar documents — is placed atop the specific, enumerated rules and regulations loan-guarantee recipients are required to obey:
“All provisions of this term sheet are subject to the following (the “Program Requirements”): (i) the provisions of Title XVII, all applicable provisions of the Recovery Act, and the Applicable Provisions, (ii) all DOE or Federal Financing Bank (“FFB”) legal and financial requirements, policies, and procedures applicable to the Title XVII program from time to time, and (iii) the Office of Management and Budget’s Initial Implementing Guidance for the Recovery Act, M-09-10 (February 18,2009), Updated Implementing Guidance for the Recovery Act, M-09-15 (April 3, 2009), Updated Implementing Guidance for the Recovery Act, M-09-21 (June 22, 2009) and, in each case, any amendment, supplement or successor thereto (collectively referred to herein, the “OMB Implementing Guidance”).”
The Abound Solar loan-guarantee documents suggest that a newborn company, which lays down with the DOE, runs the risk of being smothered by the federal leviathan before ever bringing a product to market.
Not surprisingly, the DOE doesn’t take any responsibility for smothering the newborn. Instead, it blames China and then claims the answer is MORE taxpayer money. That might explain its cavalier attitude about losing taxpayer money:
While disappointing, this outcome reflects the basic fact that investing in innovative companies – as Congress intended the Department to do when it established the program – carries some risk.
Of course, there really isn’t much “risk” when using someone else’s money.
Complete Colorado’s Todd Shepherd reported, that Abound’s DOE loan guarantee had the appearance of more than just an investment in an upstart solar company. It looked a little more like political payback in a classic pay-to-play scheme. The billionaire heiress Pat Stryker could have financed the entire project herself, but instead used her political connections to put taxpayers on the hook.
For its part, in an online press release, Abound says it’s “appreciative of the significant investment from private investors and the U.S. Department of Energy.” Abound should be “appreciative” toward taxpayers who footed much of the bill for Styker’s and President Obama’s green fantasy.
Leftist billionaire heiress Pat Stryker is waiting to see if taxpayers via the Department of Energy (DOE) will throw another $10 million at Stryker’s failed thin-filmed solar panel manufacturer Abound Solar before she puts any more of her own money into the Colorado-based company reports Eric Wesoff of GreenTech Media:
The firm awaits $10 million from the DOE and $10 million from its investors but has a bit of a chicken-and-egg problem. Our sources inform us that the DOE is waiting for the investors and the investors are waiting for the DOE. Abound’s venture investors include DCM, Technology Partners, GLG Partners, Bohemian Companies, and Invus.
The pay-to-play connection between Abound and Stryker’s Bohemian Companies was first exposed by Todd Shepherd of Complete Colorado. Shortly after the Solyndra scandal, the Energy Policy Center provided more details about Abound’s financially incestuous relationship with Stryker, Colorado State University (CSU), and former Governor Bill Ritter, now the head of the Center for the New Energy Economy at CSU.
Abound already has drawn down $70 million of its $400 million taxpayer-guaranteed loan, but it is still in a world of hurt. At current spending levels, Abound has less than four weeks of cash flow left according to Wesoff:
The firm is looking to lower its burn rate from $2 million per week to $2 million per month, according to sources close to the firm. The sources have indicated that there is roughly $7 million in the bank, a painfully short runway, and that vendors are being paid in a very selective manner.
Obviously the mass layoffs of nearly 70 percent of its Colorado workforce were a drastic cost cutting measure rather than a “retooling” of the production line as so many other media outlets have reported.
Stryker’s reluctance to provide more capital for Abound speaks volumes. If she won’t dump just a fraction of another $10 million, little more than pocket change for her Bohemian Companies, down the Abound rabbit hole, then why should taxpayers? As we reported last week, taxpayers may be on the hook for more than just the loan guarantee. They could be paying out more than $2 million in unemployment benefits for layoffs from jobs that taxpayers paid to create in the first place.
Are taxpayers still paying for Abound Solar employees despite the company’s cost saving measure of laying off 70 percent of its work force? Could be, and the figure could be more than $2 million.
Late last month Colorado-based Abound Solar announced layoffs of 180 full-time and another 100 part-time employees so the thin-filmed photovoltaic manufacturer could “re-tool” to produce its “next generation” of solar panels.
The company, which has drawn down $70 million of a $400 million taxpayer-guaranteed loan, claims it will rehire the laid off employees in the next six to nine months. Wink, wink. Imagine if Apple announced it was laying off 70 percent of its work force to prepare for the manufacturing of its updated iPad. No one would believe it. No one should believe Abound either. If there existed a market for their solar panels, employees would be working.
The problem for taxpayers is Abound employees aren’t working. Taxpayers paid $70 million to create the 280 jobs ($250,000 per job) and now they could be on the hook for unemployment benefits while those employees are out of work.
Doing the Math
According to Career Bliss, an online career search Web site, the average Abound Solar annual salary is $57,000 or $14,250 per quarter. Using the quarterly figure on the Colorado Department of Labor and Employment’s (CDLE) unemployment benefits estimator, a laid off full-time employee could receive $500 per week in taxpayer-funded unemployment benefits. Assuming Abound’s six-month estimate until the company is ready to resume production is correct, an employee could receive a total of $10,500. With 180 full time employees now out of a job, 180 x $10,500 equates to $1,890,000 in taxpayer-funded unemployment benefits for laid off full-time Abound employees.
That figure is just for the full-time employees. Another 100 part-time employees were laid off as well. An email was sent to CDLE about whether or not part-time employees are eligible for unemployment benefits. No response has been received as of this posting.
The hemorrhaging of taxpayer dollars continues courtesy of Abound Solar.