The End of Abound Solar - What Have We Learned?
By Joseph McCabe, PE
Timeline for Abound Solar
The sad news on July 2nd 2012 was that 125
employees were being laid off at the Abound Solar factories in
Colorado. Abound listed assets at $100 million and liabilities of
$500 million in the bankruptcy filing. The final auction of the
equipment assets was performed this past week.
I feel fortunate to have visited Dr. W.S. Sampath's Cadmium Telluride (CdTe) photovoltaic (PV) manufacturing laboratory at Colorado State University in February 2005. At that time the laboratory was depositing CdTe PV materials onto 16” X 16” glass panels. That soon became AVA Solar Incorporated in Fort Collins, January 2007; they announced their first round of funding on February 8, 2007. AVA then became Abound Solar in March 2009, and announced they were building a new factory in Indiana in July of 2010. Between September 2009 to January 2012 Abound’s modules increased in performance from 50 watts to 80 watts on their standard 2’ x 4’ panels. (Video: Hallway of framed accomplishments at Abound). This was an exciting technology, at an exciting time when huge amounts of investments were being made in PV manufacturing technologies.
Keith Nichols, Director of Facilities Engineering at
Abound exemplified the mentality of Abound's early days when he
told me, "We were going to change the world". Veterans from
all over the PV industry are intimately familiar with the feeling.
Some of the former Abound Solar people were at the auction, purchasing testing equipment and reinventing themselves as new northern Colorado companies marketing PV reliability services. A small number of other former employees with intimate knowledge of the sold equipment will be hired by the companies who purchased the salvaged gear for pennies on the dollar. Colorado may become known as one of the best knowledge bases for PV system performance services in part because of the experience developed at Abound Solar.
The Gear and Auction
With the Abound facility open for inspection, it was
interesting to see one blackboard showing the day to day plans for
the manufacturing floor. The chance to implement these were never
Abound Solar factory plans that were never
In hindsight, perhaps Abound should have teamed with a
glass factory. This would have helped the process and
reduced glass breakage. The complicated CdTe line was not a
turnkey system, it was pieced together from various company
machines and glass handling automation. And it was in-line so any
bottlenecks would slow or shut down a production line. This
inevitably creates integration challenges as processes were
improved, and requires extensions in time to solve unforeseen
issues. Time was not an option in today’s PV industry with rapidly
dropping module prices.
A video of
the various equipment pieced together for the full thin film
manufacturing shows ATS Automation (TSX:ATA), Cardinal (S-Corp),
Von Ardenne, and other glass handling equipment making up the very
long manufacturing process. A closer video look at Abound second CdTe
line shows previously unavailable information, due to
confidentiality, but now is a publicly available understanding of
the Abound CdTe tools and process.
The companies who lost financially due to this
bankruptcy are those that teamed with Abound including ATS,
Cardinal, Von Ardenne, companies making racking, inverters and
installation companies betting on Abound’s future sales. Anyone
owning an Abound PV system are now owning the warranty risk, as
well as any recycling of the CdTe promised by Abound for the end
of the system life. The CdTe technology requires proper collection
and recycling through programs like those offered by PV Recycling.
Cardinal was at the auction, trying to buy back their
own materials, for which a Cardinal representative said they had
not yet been paid. 8,000 pieces of Cardinal tempered glass was
sold on the web for $2,500.
One example of the discounts available at this auction
was a piece of Von Ardenne sputter equipment that originally cost
$5M and sold at the auction for $300k. Representatives from
Singapore bought what appeared to be one complete CdTe PV
manufacturing line from the auction. The results from the auction
should become publicly available at which time they will be posted
in the comments section of this article at altenergystocks.com.
Where was General Electric (NYSE:GE)?
Back in April 2011, I wrote an article titled “The
Cadmium Telluride Solar Factory Race" describing the horse
race of thin film CdTe companies competing in the PV space. At
that time, it was First Solar (NASD:FSLR)
to win, Abound to place and General Electric to show (first,
second and third place in horse racing terms). Abound and GE Solar
were basically a photo finish for last place. On July 3rd of this
year I helped break the news that GE
Solar was laying off employees in Colorado.
GE seemed missing from the public Abound auction. Why didn’t they buy-out Abound at bankruptcy? The gear would be very similar as what GE Solar/Primestar uses, and the intellectual property would be available to GE Solar. Instead the Abound equipment was sold piece by piece at auction this past week. To me this says "GE is not serious about manufacturing CdTe" or they would have been at the table purchasing specific process or support equipment. It is possible that they were hidden on the web during the auction, but they were not evident at the onsite auction. Perhaps GE doesn’t think that Abound's intellectual property or manufacturing equipment was good enough to produce profitable CdTe PV in the current price environment.
Investors can learn from this Abound Solar
experience. When analyzing future investments be looking for
signs that people are being too optimistic about the company, the
technology, the competition, and the market opportunities. Many US
PV module manufacturer bankruptcies are claiming low international
prices as major reasons for their downfall. PV module prices have
historically reduced in prices based on the well known logarithmic
experience curve (see SunShot
Grand Challenge: The SunShot Swerve by Ed Gunther; a
September 2012 Bloomberg
version is also available).
In the past two years, PV module prices have reduced in price per
watt more than expected; possibly because the increased experience
was more than expected. "We were going to change the world" became
“The solar industry has changed the world even faster than most
solar companies could handle." The bankruptcies of Abound Solar, Evergreen
Solar, Solyndra and others are part of this
world-wide-learning-curve that will continue to reduce PV modules
The book “Thinking, Fast and Slow ” by the Nobel Prize winning economist Daniel Kahneman describes how emotionally-charged-investment-decision-making is fraught with challenges. “We were going to change the world" was in hindsight too passionate. In only a few years, solar has changed the energy industry with low cost PV panels now replacing conventional sources of energy. Using experience curves, the lower priced PV modules were predictable, but not to the extend the current module prices of $0.60-$0.70 per watt discussed at the recent Solar Power International conference held in Orlando. The good news is that at these prices, there will be more and more opportunities for low cost PV system installations, more experience in the PV technology, with the positive feedback loop continuing to reduce system prices. The market becomes bigger and bigger with every drop in module and system level pricing. We are changing the world, and Abound Solar has been a part of that change.
Front of Abound Solar October, 2012 (click image for
link to empty parking lot video).
This Abound Solar experience has helped the PV
industry by investigating new technologies with specific
advantageous over conventional technologies. The lesson of Abound
is not that it’s impossible to change the world. Changing
the world is possible... but the new world is not always what we
Disclosure: No positions.
Photos and Videos by author.
Joseph McCabe is a solar industry expert with over
20 years in the business. He is an American Solar Energy Society
Fellow, a Professional Engineer, and is internationally
recognized as an expert in thin film PV, BIPV and new business
models for the solar industry. McCabe has a Masters Degree in
Nuclear and Energy Engineering and a Masters Degree of Business
Joe is a Contributing Editor to Alt Energy Stocks and can be reached at energy [no space] ideas at gmail dotcom.