The Department of Energy ignored warnings by internal solar experts when it subsidized a solar company backed by a major Democratic donor that went bankrupt in 2012, according to a report from federal watchdogs.
Abound Solar filed for Chapter 7 bankruptcy protection in June 2012 and laid off 125 employees. By that time it had drawn on almost $70 million of its $400 million DOE loan guarantee.
According to a DOE inspector general report released on Thursday, market conditions led to Abound’s collapse, but the department, while aware of those conditions, ignored the advice of its own experts when it continued financing the company in 2011.
“We found that [DOE’s] internal solar expert had previously expressed concerns to the program regarding deficiencies in Abound’s quality control,” the IG’s office wrote in its report.
Those deficiencies were apparent mere months after DOE approved support for the company, in December 2010. Credit rating service Fitch at the time called Abound a “highly speculative” investment.
Initial quality control problems forced Abound to make production changes that hindered its loan repayment ability. DOE suspended loan payments in February 2011, but despite warnings from its own solar industry expert, restarted those payments two months later.