Leaders of the House Energy and Commerce Committee are continuing their investigation into the Department of Energy's loan guarantee program, seeking information regarding the department's $400 million stimulus loan guarantee awarded to now-bankrupt solar panel manufacturer Abound Solar. Chairman Fred Upton (R-MI), Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL), and Rep. Cory Gardner (R-CO) today sent a letter to Energy Secretary Steven Chu requesting key documents and information concerning the loan in light of recent news reports highlighting Abound's technological and manufacturing problems.
Abound was the fifth stimulus-funded loan guarantee issued under Section 1705 of the Energy Policy Act of 2005, as amended by the stimulus, and the third loan guarantee recipient to go bankrupt, following Solyndra and Beacon Power. Just nine months after green lighting the loan in December 2010, DOE stopped funding the project due to Abound's failure to meet established targets. After receiving $70 million in loan guarantee funds, the company filed for bankruptcy on July 2, 2012, blaming Chinese competition for the company's downfall. However, new publicly available documents suggest Abound's problems first started with its production of a flawed product. The Daily Caller published the internal documents last week, reporting, "Internal documentation and testimony from sources within Abound show that the company was selling a faulty, underperforming product, and may have mislead lenders at one point in order to keep itself afloat."
Committee leaders want to know what DOE knew about Abound Solar's manufacturing problems prior to finalizing its $400 million loan guarantee and the disbursement of $70 million for which taxpayers are on the hook. In their letter to Chu, the members wrote, "Recent reports and publicly available documents indicate that persistent technological problems contributed to Abound's inability to remain commercially viable and, ultimately, its bankruptcy. We have questions about what role these technological problems played in DOE's decision to suspend Abound's loan guarantee disbursements in September 2011, and when DOE first became aware of these problems."
The recent reports describe significant flaws with Abound's solar panels, including losing efficiency and catching on fire when exposed to the sun. An October 2010 engineering report commissioned by DOE also noted significant "performance shortfalls" with Abound's panels, including the loss of efficiency. The members noted, "While documents prepared at the time DOE awarded a conditional commitment to Abound do not mention any technological problems, an engineering report submitted to DOE just two months before DOE closed Abound's $400 million loan guarantee indicate that Abound's panels were already experiencing significant efficiency and technological difficulties. This report, prepared by an engineering firm that DOE had engaged to review Abound, found that the company's panels were experiencing major performance shortfalls when installed by one of the company's main customers. The problems noted in October 2010 by the engineering firm retained by DOE appear to be similar to the problems described in recent reports about Abound's solar panels. In fact, publicly available documents show that several of Abound's customers ultimately asked the company to replace or repair their solar panels because they were malfunctioning or experiencing substantial losses in efficiency."
To better understand what DOE knew about the problems with Abound's solar panels, the committee is requesting key documents including engineering reports, marketing assessments, construction reports, and legal analyses submitted to DOE and any loan reviews and other analyses by DOE of Abound following the closing of the loan guarantee.