Nanosolar said Tuesday it has begun production at its San Jose, Calif., facility and has shipped its commercial thin-film panels to its first customer, Beck Energy.

The thin-film startup also announced that it has been selected to supply its Nanosolar Utility Panels for a 1-megawatt solar-power plant, being put together by Beck, on the site of a former landfill in eastern Germany.

"This is the first time that a solar-electricity cell and panel have been designed entirely and specifically for utility-scale power generation," Nanosolar CEO Martin Roscheisen said in a written statement. "It will set the standard for green power generation at utility scale."

On the Web site, Roscheisen called the news "a major milestone" helping to define the industry and said the company had had to overcome what "appeared to be mile-high concrete walls in our path" during five years of product development to get to this point.

Roscheisen claims Nanosolar's copper-indium-gallium-diselenide panels are the world's most efficient and lowest cost thin-film panels and have the lowest accompanying balance-of-system costs (the nonpanel costs, including installation).

He didn't give a number for the efficiency of the panels, but wrote that the panels deliver five times the electric current of any other thin-film panel on the market today.

He added that Nanosolar could profitably sell solar panels for as little as 99 cents per watt, but didn't give information about the price range Nanosolar actually expects to offer -- instead saying that pricing will be based on supply and demand "as in any business."

"Some market segments require lower price points that others," he wrote in an e-mail. "You're going to see a mix of prices. As we ramp volume, you're going to see lower and lower prices in the marketplace. In general, we have no interest in starting a price war with First Solar."

Instead of slicing wafers of silicon crystals to make solar cells, thin-film companies coat plastics, glass or other substrates with thin films of material that convert sunlight into electricity. Thin films can potentially use far less photovoltaic material, an advantage during a worldwide shortage of solar-grade silicon.

But in spite of decades of research, thin films had proven difficult and expensive to produce and had gone nowhere for years. Then companies began bringing new technologies from other high-tech areas, such as semiconductors, and production began growing last year.

Nanosolar isn't the first thin-film company to reach the market.

Last year, First Solar churned out 60 megawatts of its cadmium-telluride cells, becoming the largest solar producer in the United States, according to Travis Bradford, president of the Prometheus Institute, a Greentech Media Research partner (see Thin Films Lead U.S. Solar Production). The company has since grown its annual capacity to 210 megawatts and has announced plans to add another 480 megawatts of capacity (see Thin-Film Solar Production to Leap Forward).

And United Solar Ovonic and Schott Solar are among those producing amorphous-silicon films. United has the capacity to produce 28 megawatts and Schott, which announced that it began production last month, expects to have the capacity to produce up to 33 megawatts by next year (see Thin-Film Solar Gets Another Boost).

But Nanosolar is among the first to market with copper-indium-gallium-diselenide, which is potentially more efficient than other thin-film materials. The company also said last week it was nearing production at its German facility (see Nanosolar Chooses German Town for Solar Plant).

"This could signal the beginning of thin-film solar's ascension -- earlier than most people anticipated," said Eric Wesoff, a senior analyst at Greentech Media.

Wesoff said the efficiency of the units is important to know, but added that if Nanosolar can really sell the panels and make a profit at 99 cents per watt, then Roscheisen and his investors "have kicked absolute ass."

"They have tamed an ornery materials system, scaled up a tricky new manufacturing process and opened a hungry sales channel," he said. "Despite the naysayers -- myself included -- and technical challenges, if these panels ship at the right price in 2008, Nanosolar is a tribute to Silicon Valley technologists and entrepreneurs and VC risk takers."

If things go well, Wesoff also said he would expect a liquidity event in 2008 or 2009. But Nanosolar isn't out of the woods yet, he added.

"On the other hand, these first three commercial units might be conspicuous [in] their lonesomeness and their rarity worthy of an eBay collectible if a lot of things don't go right as they scale to volume production," he said.

One of the company's first three commercial panels is being auctioned on eBay, with the proceeds going to charitable causes.