Masdar said Thursday it has broken ground on its first thin-film solar-panel factory as part of its plan to invest $2 billion in thin-film manufacturing.

The renewable-energy company created by the Abu Dhabi government is spending $230 million on the factory in Germany, the world's largest solar-energy market thanks to generous government incentives and mandates for using solar electricity.

Masdar previously said the factory would be located in the German city of Erfurt, but has since settled on Ichtershausen instead.

As one of the seven states in the oil-rich United Arab Emirates, Abu Dhabi has shown a keen interest in investing in renewable energy worldwide, as well as within the country's boundaries. The goal is not only to make money from cleantech investments worldwide, but also to develop its own high-tech economy, a strategy that its neighboring emirate Dubai also is pursuing in order to move way from an oil-centered economy.

In January, Abu Dhabi said it would put $15 billion in Masdar, which will invest in a wide range of cleantech technologies and projects, including the building of a 6-square-kilometer car-free community called Masdar City within Abu Dhabi to showcase green technology (see Funding Roundup: Money for Solar, Transportation and Masdar).

With all that money, Masdar, which is run by the government-owned Abu Dhabi Future Energy Company, has emerged as a major player in the world's renewable-energy market. It plans to invest in solar, wind, hydrogen power, and carbon-emissions reduction and management.

In March, Masdar and Sener Grupo de Ingeniería in Spain said they had formed a joint venture, Torresol Energy, to build and operate three solar power plants in Spain that would use the sun's heat to generate steam and drive power-generating turbines (see Masdar Heats Up Concentrating Solar). Like Germany, Spain has also adopted solar-friendly policies.

The German factory will make thin-film panels, which use little or no silicon - the active and costly material in traditional crystalline panels - and are thinner and more flexible than conventional solar panels. The panels from this particular factory will be made of amorphous silicon, using equipment from Santa Clara, Calif.-based Applied Materials.

Masdar plans to open the manufacturing center in the third quarter of 2009. The center is expected to be capable of producing 70 megawatts worth of panels annually

Masdar said it has agreed to buy three sets of thin-film equipment from Applied Materials. One is slated for the factory in Germany, while the other two will find their homes in 140-megawatt factory in Masdar City, which is expected to begin producing solar panels in the third quarter of 2010. The panels would be used to power the showcase community.

Masdar also plans to sell panels from both manufacturing plants to solar-power installers. Masdar said it has already lined up customers in Europe.

The two factories are expected to cost a total of $600 million.

The company also plans to build more solar-manufacturing centers, with a goal of reaching a total of 1 gigawatt of annual production capacity among all of its factories by 2014.