Reuters: Bankruptcy News: UPDATE 1-Chinese competition sank govt-backed Abound Solar-executives

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UPDATE 1-Chinese competition sank govt-backed Abound Solar-executives Jul 18th 2012, 16:58 Wed Jul 18, 2012 12:58pm EDT * Price of solar panels fell as Chinese cos flooded market * Government stopped funding Abound's loan in August 2011 * DOE officials, past and present, defend loan program (Adds comments from lawmakers at hearing, questions about email) By Ayesha Rascoe WASHINGTON, July 18 (Reuters) - 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 more than 50 percent in just a year. "Such a severe market change made it difficult for Abound and others to survive," he told lawmakers at a House of Representatives oversight committee hearing on the Abound loan. House Republicans have held numerous hearings and collected hundreds of thousands of documents over the past year, investigating the Obama administration oversight of the loan program. Republicans have accused the administration of doling out loans to political supporters and placing taxpayer funds unduly at risk. Abound was backed by a major political fundraiser for U.S. President Barack Obama, but the company was also supported by Republican donors. "This is a vast scandal," House oversight committee chairman Darrell Issa said. "The amount of dollars lost, you can not blame it all on China." Issa questioned former department loan program head Jonathan Silver about his practice of conducting some government business through his personal email account while he was at the department. Silver said he used his personal email account out of convenience when traveling or handling large files and not to conceal any information. He turned over more than 2,000 documents from his personal email to the House committee. 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 at the hearing. 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. Democrats said more focus should be placed on China's role in these markets and unfair trade practices, questioning whether the ongoing Congressional probe was actually turning up inappropriate behavior. "At what point do we get the deliverables on this big scandal," said Representative Dennis Kucinich, the top Democrat on the House oversight regulatory affairs subcommittee. "We're down here talking about whether someone used Gmail or a government account." DEFENDING LOAN PROGRAM 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. (Editing by John Wallace) Link this Share this Digg this Email Reprints

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