Lawmakers Question U.S. Abound Loan Despite Quality Issues

House Republicans want more information about a $400 million loan guarantee from the U.S. Energy Department to Abound Solar Inc., citing reports that significant “technological difficulties” with the company’s solar panels were known before the aid was approved.

Representative Fred Upton of Michigan, the chairman of the House Energy and Commerce Committee, and two other Republicans on the panel wrote Energy Secretary Steven Chu seeking documents his department used to review the application from Abound, which later went bankrupt. In the letter, Upton suggests Energy Department officials should have known about problems with the Loveland, Colorado-based company’s solar panels prior to issuing the guarantee, which was part of the same program that financed Solyndra LLC. The Fremont, California, company also later failed.

An engineering report given to the department two months before it closed on the guarantee indicates that “Abound’s panels were already experiencing significant efficiency and technological difficulties,” the letter states.

One customer reported “major performance shortfalls” with Abound’s panels, the letter states, quoting the engineering report given the Energy Department.

The letter, which was dated today, continues Republican criticism of the $16 billion clean-energy loan program that was funded by the 2009 economic stimulus. Republican presidential candidate Mitt Romney has said President Barack Obama erred in directing the money to risky renewable-energy projects.

Administration Response

Administration officials have defended the program, saying the failure rate has been lower than anticipated by Congress.

Damien LaVera, an Energy Department spokesman, referred a request for comment about the investigation to an earlier blog posting on the Department’s website that cited allegations Chinese companies were unfairly undercutting market prices for solar panels, putting additional pressure on U.S. manufacturers.

“In such an intense competition and with the price declining 47 percent last year alone, not every company, nor every investment, will be a success -- but America will be stronger and more competitive if we continue to support and build a thriving solar industry here at home,” LaVera wrote in the June 28 post.

In an e-mail, LaVera also said the department had already provided the committee engineering and market analyses of Abound’s loan application.

Taxpayer Losses

Abound borrowed about $70 million from the U.S. before the Energy Department stopped payments. The Energy Department has said taxpayers may lose $40 million to $60 million on the loan after Abound’s assets are sold and a bankruptcy proceeding concludes.

The company stopped operations in June, prompting more criticism from Republicans who had said Solyndra’s earlier failure after receiving a $535 million loan guarantee showed the problems of trying to pick “winners and losers” in the market.

Republican and Democrat lawmakers from Indiana also supported Abound’s loan, as the company sought to build one of its plants in the state.

Craig Witsoe, Abound’s chief executive officer when it closed, blamed “aggressive price-cutting from Chinese competitors” for the company’s collapse. Besides the $70 million from the U.S., Abound also attracted about $300 million in private investment.

The House Energy and Commerce Committee refused to release the engineering report allegedly showing early technical difficulties with Abound’s solar panels.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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