Update: Eric Wesoff of GreenTechSolar corrected something we quoted him on regarding Abound Solar’s $400 million DOE loan guarantee. “Abound has drawn down much of its $400 million DOE loan guarantee only $70 million of its $400 million loan guarantee in order to fund its factory buildout.”
Eric Wesoff of GreenTechSolar is curious about what is going on at Abound Solar. Are top executives just finding sunnier pastures elsewhere or are they jumping ship before it goes down Solyndra style?
In July 2010, President Obama announced that Colorado-based Abound Solar was the recipient of a $400 million taxpayer guaranteed loan as part of the Department of Energy’s (DOE) now infamous loan program. Abound would use the money to expand production in Colorado and open another manufacturing plant in Tipton, Indiana, promising at least an additional 850 jobs.
Fast forward to fall 2011, the demand and price for solar panels have plummeted, and three top executives have left the thin-film solar panel manufacturer. Wesoff spoke with all three before their announced departures and all were optimistic about Abound Solar and the industry:
I spoke with Tom Tiller, Abound Solar’s CEO a few months ago. He expressed optimism for the future of the VC and DOE-enabled cadmium telluride solar startup. That was shortly before he left his CEO post because of what he said were “unexpected issues in our family.”
Tiller will remain as Chairman while Craig Witsoe replaces him as CEO. According to Tiller, his new role will have less of a day-to-day involvement. Wesoff continues:
I spoke with Russ Kanjorski, VP of Marketing at the Colorado-based Abound Solar, at the Intersolar show in San Francisco in July about the trajectory of his firm. Kanjorski was sanguine about Abound’s technology and manufacturing ramp. Kanjorski has since jumped ship to early-stage Concentrated PV firm Semprius.
Kanjorski has a history with another failing energy company that also received taxpayer money. Fred Barnes reported in the Weekly Standard in July 2010:
Russell Kanjorski, the vice president for marketing at Abound Solar, was one of the principals in another energy company in northeast Pennsylvania, called Cornerstone Technologies LLC, which attracted $9 million in federal grants before it halted operations in 2003 and later filed for Chapter 7 bankruptcy. As reported by the Wilkes-Barre Times Leader, “Cornerstone reported $14,100 in assets compared with $1.34 million in debt” in its bankruptcy filing. The $9 million in federal grants to Cornerstone were earmarked by Kanjorski’s uncle, Representative Paul Kanjorski of Pennsylvania, chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
The latest top executive to leave Abound is senior vice president Julian Hawkins, and Wesoff spoke with him before his announced departure as well:
Last month at the Solar Power International show in Dallas, TX, I spoke with Julian Hawkins, Senior VP at Abound Solar. Hawkins was enthusiastic about Abound’s prospects. But not enthusiastic enough to keep him from joining the precariously functioning Energy Conversion Devices as CEO. Energy Conversion Devices…is a long-struggling supplier of flexible amorphous silicon (a-Si) photovoltaic laminates, with a deflated stock price amidst a “Restructuring Plan” and recent suspension of its manufacturing operations. It is difficult to envision ECD surviving much longer as an independent public entity.
Why would three enthusiastic top executives with $400 million in taxpayer guaranteed loans leave their positions just as the company is expanding its Colorado manufacturing and just ahead of an expected major build out in Indiana? Wesoff sarcastically suggests suicide missions or…
perhaps these executives have read the writing on the wall and want to get out of Abound before it becomes another Solyndra and attracts the attention of Fox News and the Tea Party. Recipients (Beacon Power) or even applicants (Next Autoworks) of DOE loans have had a run of bad luck lately.
Abound has problems besides revolving door executives. In December 2010, then CEO Tom Tiller told the Indianapolis Business Journal that “90 percent of Abound’s sales are in Europe, and most of the production from the expanded factories will be exported to the European region.” Since then, solar panel prices have plummeted and so has demand from its major market Europe. The European financial crisis has forced countries to slash subsidies. In Germany, the largest purchaser of solar panels in Europe, sales are expected to drop by 30 percent.
The Economist reports that the market is seriously oversaturated. Capacity has tripled over the last two years in response to European demand and now much of that is being shut down. Mountains of unwanted solar panels are forcing manufacturers to slash margins in order to avoid being stuck with dated product.
Early this year the average panel price was around $1.75 per watt; by the year’s end it could be as low as $1.10. That is less than the cost price for many Western manufacturers and small Asian ones, several of which have already gone bust. They include Solyndra…
In September Hawkins told Bloomberg that with expected ramped up manufacturing to 200 megawatts, Abound could near the $1 per watt by the end of 2012. Still that may not be enough. Jenny Chase, lead solar analyst for Bloomberg New Energy Finance said Abound will need to be near .91 cents per watt.
But the only way to get there is volume, and Abound, which produced 30 megawatts in 2010, didn’t even crack the top ten thin-filmed solar panel manufacturers. Solyndra was number seven.
At 1,400 megawatts, First Solar is the world’s largest thin-filmed solar panel manufacturer. It’s next closet competitor pumps out a mere 195 megawatts. Also, First Solar produces the same type of cadmium-telluride (CdTe), thin-filmed panel as Abound only much cheaper, and the panel itself is more efficient. This is a problem for Abound as Wesoff warns:
Abound still has to contend with thin-film leader First Solar. First Solar’s 87-watt CdTe panels have an 11.7 percent conversion efficiency and a cost of $0.74 per watt with expectations of reaching the mid $0.60s in 2012.
Wesoff also writes that Abound already has “drawn down much of its $400 million DOE loan guarantee” and Indiana based plant is not expected online until 2014. The Kokomo Tribune reports that in the wake of the Solyndra bankruptcy some Tipton residents are concerned about whether or not the expansion will happen.
Less than a year ago, Abound relied heavily upon the European market. Now, it anticipates shipping “half its 45 megawatts of sales this year” to its new market in India. But that’s First Solar territory, which announced its shipments to India will be 200 megawatts for five projects in 2012. GigaOM explains that CdTe panels produced by both manufacturers are well-suited for India, but First Solar’s size gives it an advantage:
First Solar’s ability to produce solar panels more cheaply than others is its true advantage because the national solar program seeks competitive bids and selects those who promise to complete projects at lower prices. Manufacturing at a large scale makes it possible to keep solar panel prices low, and at this point, First Solar is the largest non-silicon solar panel maker worldwide and the only one with an army of factories and big sales team.
Bottom line is that for Abound to compete, it must expand. It received a $400 million taxpayer guaranteed loan to do so, yet as of today it isn’t hiring. It currently has zero job openings and the Tipton plant isn’t even listed as a possible location. Perhaps that’s because demand for and price of its product both have dropped. Maybe that’s why the three executives have different positions.