Amonix, the solar panel manufacturer whose Las Vegas plant ceased operations in May, managed to secure millions in federal grants and potential tax breaks even though its product had quality problems and was never really economically viable, according to sources.
The politically connected company had the backing of Senate Majority Leader Harry Reid (D-NV), Rep. Shelley Berkley (D-NV) and Gov. Brian Sandoval (R-NV). Amonix also benefited from a close relationship to Cogentrix, a subsidiary of the Goldman Sachs Group.
Cogentrix selected Amonix to be the exclusive supplier of the concentrated photovoltaic cells (CPV) for its 30-megawatt solar plant in Alamosa, CO, the largest in the world. The Department of Energy awarded Cogentrix a $90.6 million loan guarantee in September 2011 to help pay for the Alamosa Solar Generating plant.
The plant began full commercial operations in May, around the same time Amonix shuttered its Nevada manufacturing facility. Now that the Amonix manufacturing facility has ceased operations*, the once-hyped technology it manufactured is getting a closer look.
‘An unproven technology’
This week the Las Vegas Review-Journal quoted a former Amonix employee, who indicated that the manufacturer was experiencing “quality issues” and that panels were being returned:
Rene Kenerly, a former material and supply manager at Amonix, said the plant has been idle since May 1, when he was laid off. At its peak, the plant had about 700 employees working three shifts a day to produce solar panels for a utility in Amarosa, Colo., he said.
“I don’t think they had a lot of training,” Kenerly said. “There were a lot of quality issues. A lot of stuff was coming back because it had some functionality issues.”
Kenerly estimated that Amonix was suffering from approximately $100 million in debt, and had failed to pay its own suppliers, including shipping costs to the solar plant in Colorado. In 2010, GigaOm described CPV as a “niche technology,” whose “first high-profile” installations had not “panned out so far.”
Eric Wesoff, recapping the demise of the Amonix plant, called CPV the “the zero-billion-dollar market” and said the technology was traditional photovoltaic’s “low-functioning sibling”:
Amonix was the presumptive leader in the CPV solar market niche, and despite its press release claims of “adjusting our business” in order to “restructure the company,” these words and actions typically represent the death rattle of a VC-funded startup. Amonix has the most CPV systems installed, the largest kilowatt system size, the largest installations (Alamosa, CO and Hatch, NM), the most employees (at one point), had closed one of the largest CPV venture capital rounds, and had the support of some of the most savvy VCs. (Savvy in fields other than solar, at least.)
In Wesoff’s estimation the price of CPVs, as much as 2-3 times that of flat-panel PVs, makes them “not an economically viable technology for production of large-scale terrestrial solar power.” Among the technology’s shortcomings, he noted, was the price of the system, tracking accuracy, and questions about reliability. The combination of the factors, he said, “dooms the technology in terrestrial applications.”
Wesoff was unable to gather performance information on the panels from Cogentrix, and Xcel, the utility providing the electricity to local customers. He wrote:
You’d think that these firms would want to trumpet positive performance data. Or bury their disappointing energy harvest, as the case may be. We have heard unconfirmed reports that both Alamosa and Hatch have had their share of technical issues.
Cogentrix’s vice president of development, Jef Freeman, described the technology used in the CPV panels as “unproven” and the reason that the company sought federal loan guarantee support: “With an unproven technology, we couldn’t get a loan from a bank. This has made it a bit uncomfortable for us, but it is a poster project for success.”
A government-funded failure
Amonix suffered the loss of its CEO, Brian Robertson, in late 2011. Earlier this year, the company began layoffs, as they planned a “retooling to redeploy our next generation utility-scale CPV (concentrated photovoltaic) solar power system.” The hope was to ramp up operations later in 2012.
The downfall came just two years ago after Cogentrix touted the technology as “more efficient, producing more energy per acre than any other solar technology making it well suited for utility-scale applications in sunny and dry climates.”
Cogentrix is a wholly owned subsidiary of Goldman Sachs, which invested heavily in the Amonix, to the tune of $25 million. Other principal investors included Kleiner Perkins Caufield & Byers, MissionPoint Capital Partners, Angeleno Group, PCG Clean Energy & Technology Fund, Vedanta Capital, New Silk Route, The Westly Group and Adams Street Partners.
Then there was the federal government. Before its collapse, Amonix received tens of millions of dollars in federal grants and potential tax breaks from a variety of government agencies and programs. The majority of the government funding, gradually paid out over time, was first awarded in 2007 by the Department of Energy. The company never made use of an additional $5.9 million in federal tax credits it was granted by the 2009 American Recovery and Reinvestment Act stimulus as part of the Advanced Energy Manufacturing Tax Credit.
According to the Las Vegas Sun, the reason Amonix was unable to tap into the tax credits was because it failed to realize any taxable income, despite landing the enormous order for the Colorado solar facility.
Energy Secretary Steven Chu touted Amonix’s Las Vegas facility in mid-2011, underscoring the company’s contribution of more than 300 green jobs, in what was then called a “solar power success story” by local media.
“It’s companies like this and it’s programs that we’re trying to do here,” said Chu, “that will really propel us forward to create jobs, create prosperity, and create clean energy.”
*In the original post, Amonix was decribed as having gone out of business. Only the Nevada manufacturing plant was shuttered.