Frozen capital markets are putting the chill on a fast-growing California solar company, a sign that the economic downturn is being felt even in the state's thriving renewable-energy sector.
Hayward-based OptiSolar Inc. confirmed Monday that it dismissed nearly half its 600-member workforce last week, cutting 185 jobs at its Hayward facility and 105 at a plant in Sacramento.
The privately owned start-up, which develops utility-scale solar farms, hasn't been able to secure financing to complete a planned expansion of its photovoltaic panel assembly facilities, according to company spokesman Alan Bernheimer.
"The equity markets just froze up last fall," he said. "We found ourselves with a staff whose numbers were predicated on rapid expansion, and that wasn't sustainable" without additional funding.
Bernheimer said the company was seeking loan guarantees from the U.S. Department of Energy that would enable it to complete the build-up of its manufacturing operation and hire back some of its laid-off workers.
More than jobs may be at stake. OptiSolar made a big splash last year when it announced it would build a 550-megawatt solar farm in San Luis Obispo County whose power would be purchased by San Francisco-based Pacific Gas & Electric on a long-term contract.
State law requires California's investor-owned utilities to procure 20% of their electricity from renewable sources by 2010, a figure that's set to rise to 33% by 2020. The San Luis Obispo facility is one of the largest projects of its type ever proposed in North America.
Bernheimer said the solar farm was still in the permitting stages and wasn't scheduled to begin delivering power until 2011, giving OptiSolar plenty of time to right the ship and meet its commitment to PG&E.
Still, analysts are predicting a shake-out in the solar industry this year despite continued strong demand in California and other states with similar mandates to boost their use of green energy. The deepening recession is limiting the ability of solar firms to raise capital to expand their operations. A glut of photovoltaic panels is squeezing profit margins. And investors are shying away from untested players in favor of companies with a history of sales and earnings.
"They're in a tight spot," Nathaniel Bullard, a solar analyst with New Energy Finance in Alexandria, Va., said of OptiSolar. "That's a very ambitious power plant . . . even in a good credit market."
Launched in 2005, OptiSolar is a vertically integrated solar power company. It manufactures its own thin-film photovoltaic panels to supply solar farms that it develops and manages. Its biggest project to date is a 10-megawatt facility in Sarnia, Canada. Bernheimer said OptiSolar was developing several solar farms for the Ontario Power Authority totaling 210 megawatts.
PG&E spokeswoman Jennifer Zerwer declined to comment on whether the utility had a backup plan in case OptiSolar can't complete the San Luis Obispo project.
"We have no indication that OptiSolar won't meet their financial obligations," she said.