CaliSolar, which is developing solar cells using upgraded metallurgical silicon, expects to complete building its first commercial factory this September and quadruple the capacity by the end of next year, the company's CEO Roy Johnson said.

The startup is currently constructing a 50-megawatt factory in Sunnyvale, Calif. where it's headquartered. By the end of 2010, CaliSolar plans to expand it to a 200-megawatt solar factory, said Johnson, who spoke at the Intersolar North America conference in San Francisco Monday.

CaliSolar, founded in 2006, is pursuing a technology path that attracted investors' attention at a time when the solar industry faced a shortage of silicon, the raw material for making most of the solar cells on the market.

Instead of using the kind of silicon that has been used for making solar cells as well as semiconductors for computers and other electronics, CaliSolar is using purified metallurgical silicon. Metallurgical silicon has too many impurities for making solar cells and is traditionally used for making aluminum alloys.

Purifying metallurgical silicon into what's commonly dubbed "upgraded metallurgical silicon," or UMG, creates a cheaper alternative. The challenge, though, is to refine it enough for it to be made into cells that could rival conventional solar cells in their ability to convert sunlight into electricity.

Companies such as Timminco are developing and producing UMG silicon, but the product is still in the early stages of market adoption. Timminco signed a supply agreement with CaliSolar last year.

The rapid decline of silicon prices over the past year has raised questions about the feasibility of using UMG silicon. Purer silicon fetched hundreds of dollars per kilogram in early 2008 on the spot market, but has since fallen to around $70 per kilogram.

"There has been a huge swing in poly price, but we believe the inherent cost advantage associated with UMG will allow us to grow and eventually become a very large part of the market," Johnson said.

In an interview after his talk, Johnson said that UMG silicon still costs much less than $70 per kilogram, but declined to predict if there would be a time when the prices for both types of silicon would intersect.

Canada-based Timminco recently had to amend its five-year deal that it signed with Germany-based Q-Cells in 2008. The new agreement, announced in May this year, calls for Timminco to deliver 100 metric tons of UMG silicon for 2009, and the two companies would negotiate the pricing and shipment volumes for 2010 through 2013 toward the end of 2009.

In its announcement about the amended deal, Q-Cells' CEO Anton Milner called UMG silicon a "mid- to long-term perspective."

CaliSolar has shipped "thousands of solar cells" to panel makers over the past year for evaluation, Johnson said.

He declined to disclose their names, but said he expects to announce a customer who is willing to commit to a long-term contract by the end of this year.

The cells from its pilot line could achieve on average 15.4 percent efficiency, though the company has made cells that reached 16 percent efficiency, Johnson said. Those cells are made with 100 percent UMG silicon.

CaliSolar has submitted its cells for third-party verification, but Johnson wouldn't provide more details.

"Our take is it's a lower efficiency solution if you don't do it right. If you have the right techniques and people, you can actually make very competitive solar cells out of this material," Johnson said.

With a 200-megawatt manufacturing capacity, CaliSolar could deliver cells at under $1 per watt, Johnson said.

CaliSolar plans to apply for federal loan guarantees to help finance its factory plan, Johnson said. He declined to discuss how much the company would be seeking or the factory construction costs.

Johnson also has been shy about discussing the company's other fundraising efforts.

CaliSolar reportedly raised $60 million, according to VentureWire (via VentureBeat). Johnson declined to confirm it. Private Equity Hub also reported that CaliSolar had raised $101.9 million last year.

The company raised a first round of $9 million from Advanced Technology Ventures and Globespan Capital Partners in 2006, CaliSolar said.