Abound Solar feels bankruptcy’s shade

Abound Solar, a US-based company developing solar panel modules, plans to file for bankruptcy this week despite having raised $260m in equity in three years from a large group of investors including oil major BP.

Abound, formerly known as AVA Solar, had also closed $400m in loan guarantee from the US Department of Energy (DoE) to expand its manufacturing to a second plant making thin-film, cadmium telluride (CdTe) solar photovoltaic modules. However, Abound said it had collected only $70m of the DoE’s loan but had "not drawn down any further DoE funds since August of 2011 when the DoE determined that challenging market conditions in the solar industry did not merit additional funding risk".

The company effectively said these challenging market conditions were a result of Chinese competition. Its statement said: "Abound believes that, at scale, its US-made CdTe panel technology has the ability to achieve lower cost-per-watt than competing crystalline silicon technology made in China. 

"However, aggressive pricing actions from Chinese solar panel companies have made it very difficult for an early stage startup company like Abound to scale in current market conditions. 

"According to the US Commerce Department, the US solar market has seen the prices for panels drop by more than 50% in the past year at a time when the value of imports of Chinese-made solar cells nearly quadrupled from $639m in 2009 to $3.1bn in 2011. 

"Abound supports recent initiatives to enforce fair trade with import tariffs, but this action is unfortunately too late for the company."

In December 2010, BP’s corporate venturing unit had joined the consortium investing $110m in Abound.

Alongside BP Alternative Energy Ventures, the other new investor in the series C round at the end of 2010 was West Hill Companies, a family office in Wyoming.

The remaining consortium members, which had previously invested in Abound, were: Invus Group, a $4bn evergreen investment company backed by undisclosed European families through their Artal investment vehicle; Bohemian Companies, a family office in Colorado; and venture capital (VC) firms DCM and Technology Partners.

Abound was founded in 2007 after 15 years of development at Colorado State University and with support from the National Renewable Energy Laboratory and raised $104m in its second round in August 2008 and $300m of equity over its lifetime.

John Hill, founder of VC firm Hill Carmen Ventures, said in 2007 when he was chairman and angel investor in the portfolio company’s seed round said: "AVA Solar is the most exciting startup I’ve been a part of in almost 30 years of investing in technology-based companies."