Calisolar snags $275M loan guarantee for solar silicon factory

Calisolar has become the fourth solar manufacturer to receive a federal loan guarantee offer. The company, which turns lower-grade silicon into purer version for making solar cells, is set to use the $275 million loan guarantee to help build a factory in Ohio, the U.S. Department of Energy said Thursday.

The venture-backed California company plans to build a factory that will eventually produce 16,000 tons of silicon each year. Calisolar will build the project in three phases and set up the manufacturing at an old General Motors plant.

The company was founded in 2006 to commercialize a technology to make solar cells from the purified silicon. Around that time, the prices for conventional, purer silicon were going up to a few hundred dollars per kilogram because silicon producers couldn’t make enough to meet the demand from both the solar and chip manufacturers. Silicon is the key ingredient in processors that power consumer electronics such as laptops, cell phones and iPads.

The purified silicon uses the cheaper but dirtier metallurgical-grade silicon material, and using it to make cells requires a different process. The purified silicon promises to cost less and work just as well as the conventional silicon, but there is skepticism about whether that is true.

The silicon shortage has eased since Calisolar’s start. But the company says it remains competitive in the market because its technology is able to produce cheaper solar cells that rival those made with conventional silicon. Calisolar bought a silicon purifying company, 6N Silicon, in Canada in 2010. Calisolar now claims it can produce silicon at a cost (equipment and factory construction) that is about one-sixth of a traditional silicon plant.

The company opened its first a solar cell factory in Silicon Valley in 2009 and began shipping products to customers in 2010. Calisolar’s website says 10MW of solar panels that contain its cells have been installed.

The loan guarantee is the fourth announced by the DOE this week. The three other awards went to solar power plant developers. Through the loan guarantee program, the DOE promises to pay back loans if borrowers can’t. The program funds manufacturing and renewable energy power plant construction. Solar companies have gotten more loan guarantee offers than companies in other renewable energy businesses.

Image courtesy of Calisolar