Nanosolar announced Wednesday it has completed a $75-million Series C round of financing and will use the money, plus government subsidies, to build the world’s largest photovoltaic solar factory.

Combined with the subsidies, the total funding actually amounts to $100 million, the thin-film company said.

“This means that we now have eliminated the financing risk and are fully executing on all our plans,” said Martin Roscheisen, chief executive of Nanosolar Inc. “Our investors are people really tuned in to the PV business, so we’re going to have a really awesome extended team to help us build our company. These are people who extend our network in very meaningful ways.”

Existing investors Mohr Davidow Ventures (MDV), Benchmark Capital, OnPoint Technologies, and Mitsui participated in the round.

New investors include investment funds SAC Capital and GLG Partners, insurance firm Swiss Re, photovoltaic power plant system integrator Beck, Grazia Equity (which was an original backer of Conergy, the world’s largest PV system integrator), Christian Reitberger (who was an original backer of crystalline solar cell giant Q-Cells), SAP founders Klaus Tschira and Dietmar Hopp, and Jeff Skoll, eBay’s first president and chief executive of media company Participant Productions (through his investment company, Capricorn Management).

‘It’s a place for startups to get involved, because they are not going to compete against Sharp.’  -Erik Straser,   MDV

‘Vote of Confidence’

“These are seasoned PV investors that have already made money in PV,” said Erik Straser, a general partner with MDV. “That tells you that the opportunity is very unique because the people already know the business—and who have proven they can make money in this business—are putting money into Nanosolar. It’s an informed vote of confidence.”

Nanosolar, a Red Herring 100 company, raised $20 million in a Series B round in June, and previously received government grants, including $10.5 million from the U.S. Defense Advanced Research Projects Agency (DARPA), part of the Department of Defense (see Nanosolar Raises Funding, The Top 100 Private Companies: Nanosolar).

The Palo Alto, California-based company, formed in 2002, got its seed funding from Google founders Sergey Brin and Larry Page, and Mr. Page’s brother, Carl Page.

The factory that will bring Nanosolar’s thin-film technology to the market will have an annual capacity of 430 megawatts once it’s fully built, will churn out about 200 million cells per year, and will be located in the San Francisco Bay Area.

Nanosolar has begun ordering parts for the fab, which will be completed in 2007. The company previously told Red Herring it expected to commercialize its cells by 2006.

Nanosolar is also building a panel assembly factory designed to produce more than 1 million solar panels annually, which will be located in Berlin.

Mr. Roscheisen said most of the capacity is already spoken for in supply agreements, but he wouldn’t disclose who the buyers are (or if investors Conergy, Q-Cells, or Beck are among them).

The Technology

Nanosolar has a thin-film solar technology that it claims is 10 times as efficient as traditional cells, and a printing-based manufacturing technique that it says will bring the price down to less than a dollar per watt, competitive with natural gas and peak electricity prices.

Thin films use little to no silicon—an advantage since the high-grade silicon needed for PV is scarce. Even without today’s shortage, silicon has been the costliest part of a traditional cell. And light, flexible thin films could tap into lucrative new applications like consumer electronics and clothing.

But researchers have been developing thin films for years, with little success. Michael Rogol, an analyst for CLSA Asia-Pacific Markets, said they have “a history of potholes, unkept promises, and disappointments” (see Solar’s Going Thin).

They have historically proved difficult and expensive to manufacture on a large scale, says Mr. Rogol. In addition, they didn’t convert sunlight into electricity as efficiently and decayed quickly.

The first generation of thin films used slow, vacuum-based processes, Mr. Roscheisen said. The second generation is focused on faster, cheaper process technology.

“The first-generation process technologies were just not the right ones,” he said. “What’s to blame was vacuum-based deposition techniques that just led to the wrong economics for this industry. That’s why HelioVolt and others are going for processes not based on the vacuum. That’s what we’ve been working on, too—really high throughput and high efficiencies, and that’s something that we’ve achieved.”

The Bigger Picture

Nanosolar isn’t the only company working on thin films, of course. A number of thin-film startups, including Innovalight, Konarka, Miasolé, and HelioVolt, have also received funding in the last year (see Nano Solar Firm Gets Funding, Konarka Raises $20M in Funds, Energy Innovations Gets Cash).

In February, Royal Dutch Shell sold its crystalline silicon business to SolarWorld, choosing to focus on thin-film technology instead. In December, Honda Motor said it will enter the thin-film business and mass-produce cells by 2007. And Ron Kenedi, head of North and South American operations for Sharp, the No. 1 solar manufacturer, told Red Herring he sees thin films becoming mainstream in two to three years (see Sharp’s Key to Success in Solar).

Materials like cadmium telluride and copper indium gallium selenide have made thin films more efficient and longer-lasting. Startups have begun to apply manufacturing processes from other high-tech areas—like disk drives—in an effort to scale up and lower costs.

“People are excited about thin films because they see the inadequacies and limitations of PV on silicon,” Mr. Straser said. “They see an industry price that isn’t dropping that fast, in an industry where price directly affects the size of the market.

“It’s a place for startups to get involved, because they are not going to compete against Sharp,” he said. “It’s a way that startups see they can build a technology advantage.”