AVA Solar has raised $104 million in equity financing to build its first thin-film solar factory, the one-year-old company said Wednesday night.

The startup, based in Fort Collins, Colo., is developing a thin film using cadmium telluride, making the company a direct competitor of First Solar in Tempe Arizona. First Solar is the world's No. 1 thin-film solar manufacturer.

AVA plans to use the money to complete its first factory. AVA's manufacturing plant, which is expected to have the capacity to produce up to 200 megawatts of panels per year, will be located in Longmont, Colo.

The company has begun pilot production to test its tools and prepare for commercial production next year, said Russ Kanjorski, vice president of marketing at AVA Solar.

AVA said it has developed its manufacturing process based on 15 years of research at the Colorado State University's Material Engineering Laboratory.

Thin films have the advantage of using little or no silicon – an attractive prospect in today's silicon shortage – and poster child First Solar boasts the lowest costs in the industry today. But First Solar aside, making thin films cost-effective in large volumes has proven challenging, even after decades of research and development.

Only a handful of thin-film solar companies have commercial products. Another challenge is that thin films don't convert sunlight into electricity as efficiently as traditional flat-plate solar panels.

AVA Solar is competing with dozens of other thin-film panel makers, including those that use materials other than cadmium telluride, such as amorphous silicon or copper indium gallium deselenide, to convert sunlight into electricity.

Greentech senior analyst Eric Wesoff wrote about AVA Solar's new round in the afternoon before the company announced the funding (see Green Light post).

AVA joins the ranks of a series of thin-film companies that have attracted large sums from investors.

Nanosolar, based in San Jose, Calif., announced Wednesday that it had raised $300 million to expand an existing factory in its hometown and build another one in Germany (see Nanosolar Confirms $300M Funding). The company, founded in 2002, is producing copper-indium-gallium-diselenide films, also known as CIGS.

Austin, Texas-based HelioVolt, which also is developing CIGS, said last October it had raised $101 million (see HelioVolt Gets More Cash for Thin Solar).

In addition to competing with other thin-film makers, AVA Solar also faces competition from companies making traditional solar panels using crystalline silicon, the same material used to make the chips that power computers and cell phones. By far, the majority of the panels made today are based on silicon.

DCM led AVA's new round of funding, which also came from Technology Partners, GLG Partners, Bohemian Companies and Invus. The company raised a previous round from Invus and a seed round, but it declined to disclose the amounts of those fund raisings.