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PA’s Solyndra? Pittsburgh solar plant received $10 million in stimulus, now going bankrupt

By   /   April 4, 2013  /   8 Comments

By Eric Boehm | PA Independent

HARRISBURG — A Pittsburgh-area solar energy company that received more than $10 million as part of the federal stimulus is asking a federal judge to allow it to file bankruptcy.

SOLAR ECLIPSE: A $10 million investment by the federal government and millions more from the state were not enough to prop up a solar energy company in western Pennsylvania.

Ten former employees at the Flabeg Solar U.S. Corp plant have petitioned a federal judge for severance pay after they lost their jobs last month as the plant was shut down.  Media reports indicate that as many as 60 workers were laid off at the 4-year old, 228,000 square foot facility near Pittsburgh.

The 10 employees listed in the filing are seeking $197,000 in severance pay, according to court documents.

Robert Lampl, the Pittsburgh-based attorney for the energy company, was not immediately available for comment, and a receptionist at his office said the bankruptcy filings were not yet available because they had not been officially submitted to the court.

Lampl told other media outlets on Thursday that the company was going to seek Chapter 11 bankruptcy protection in response to the lawsuit over the severance pay.

Calls to the plant were not returned before the initial version of this story was published on Thursday, but Flabeg spokesman Joerg Nolte contacted PA Independent on Friday to explain that the Pittsburgh plant was shutting its doors due to a lack of businesses.

“As the current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue with the Clinton plant, we have no other option but to close this plant with immediate effect and wind down operations,” Nolte wrote in an email.

The plant was owned by an American subsidiary of a German glass-making firm.  The plant in Pittsburgh was manufacturing glass mirrors used by solar energy companies that do not employ the more common photo-voltaic technology.

In 2009, when President Barack Obama announced a round of $2.3 billion in tax credits for 183 clean-energy projects in 43 states, including the $10 million for the Flabeg plant in Pittsburgh, he promised the investment would return 17,000 new jobs.

“Building a robust clean energy sector is how we will create the jobs of the future — jobs that pay well and can’t be outsourced,” Obama said.

Projects funded with the stimulus dollars would help to close a clean-energy gap between America and other nations, he said at the time, according to a press release.

At the same time, vice president Joe Biden commented that investments in companies like Flabeg were “what the Recovery Act was all about.

The $10 million awarded to Flabeg Solar was for the production of high-temperature solar mirrors to be used in solar energy power plants.

According to a report from the Pittsburgh Tribune-Review, the state and Allegheny County chipped in another $9 million to help get the plant off the ground.

Friday, Nolte said the Flabeg plant near Pittsburgh did not remain in operation long enough to take advantage of the tax credits offered by various governments.

“To utilize the tax credits, sufficient profits are required that the tax credits can be applied against,” he wrote.

In addition to the tax credits, the company received a $1 million cash grant from the federal government, Nolte said.

George Jugovic, president and CEO of PennFuture, an environmental advocacy group based in Harrisburg, said not all investments in emerging industries like solar power are going to work out.

“The reason government steps into these cases is because they are too risky to get private capital,” Jugovic said. “But as with private investments, some companies fail.”

Despite some high-profile setbacks, Jugovic said public investments in solar energy were paying off and would continue to do so.

Kevin Shivers, executive director of the Pennsylvania chapter of the National Federation for Independent Businesses, said government can only pick losers when it tries to make risky investments.

“If private investors aren’t willing to invest in a company, that should be the first indication that something is wrong,” he said.

Rather, governments should focus on changing the tax and business climate to give start-up businesses in all sectors a better chance at success, he said.

The possible bankruptcy of the Flabeg plant fits into a narrative of major bankruptcies of so-called “green energy” firms, beginning with the much-publicized 2011 bankruptcy of Solyndra Inc., a California-based solar energy firm that received more than $500 million in federal loan guarantees and was touted by Obama as evidence of the growing clout of solar energy in America.

The largest subsidiary of Suntech Power, a Chinese company that is one of the world’s largest solar panel manufacturers, was pushed to the brink of bankruptcy in March. It owes bondholders more than $541 million, according to multiple media reports.

This article was updated at 4:30 p.m. on 4/4/13 to include additional comments and information about Flabeg.

This article was updated at 11:50 a.m. on 4/8/13 to include comments from Flabeg’s spokesman.

Eric Boehm can be reached at [email protected] and follow @PAIndependent on Twitter for more.