As Solyndra falls, Stion scales up

As one thin-film solar company falls (Solyndra), another one is scaling up. Silicon Valley startup, Stion, on Friday officially opened the doors of its factory in Mississippi, marking a milestone for the company as it seeks to expand production quickly in an increasingly competitive market.

San Jose-based Stion makes solar panels that use copper, indium, gallium and selenium (CIGS) instead of conventional silicon to convert sunlight into electricity. In January this year, the company announced the plan to build the Mississippi factory, which the company expects to eventually reach 500 MW of production capacity and require $500 million in investment. Stion completed a 10 MW pilot line at its headquarters last year.

The factory represents a nice coup for Mississippi lawmakers, who offered Stion a $75 million loan plus tax and job training incentives to build and run the factory. Legislator and Gov. Haley Barbour recently lured another Silicon Valley startup, Calisolar, by offering the solar silicon producer a $75.25 million package to build a factory there.

Stion plans to expand its production in Mississippi in phases. The first phase is supposed to reach 100 MW of production capacity. The company held a grand opening ceremony for the factory on Friday, but it won’t start producing solar panels until later this year, Stion said. Manufacturers need time to test-run equipment and train employees before rolling out products.

Stion hopes to mass-produce solar panels at much lower costs than its rivals, a goal that is shared by many startups and is increasingly difficult to accomplish. Wholesale prices of solar panels have plummeted in the past three years as manufacturers in the U.S., Asia and Europe built many factories.

Chinese manufacturers, in particular, have expanded production rapidly thanks in part to the huge loans they received from government-run banks. The stiffened competition already has forced three American companies, including CIGS solar panel maker Solyndra, to file for bankruptcy in the last two months.

Stion raised a Series D round of $70 million as of June 2010, including $50 million from Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip manufacturer. Before that, it had raised $44.6 million in equity from investors including Khosla Ventures, VentureTech Alliance and Lightspeed Venture Partners.

To expand the Mississippi factory to 500 MW, Stion plans to raise at least another round of funding and will consider an initial public offering, the company’s CEO, Chet Farris, told us earlier this year.

Image courtesy of Stion