The new SoloPower plant

SoloPower's former chief technology officer Mustafa Pinarbasi details the company's manufacturing process during a Portland plant tour in September. It will suspend operations there entirely starting in June.

(Benjamin Brink/The Oregonian)

, the startup pitched as the most innovative player in Oregon solar manufacturing, will suspend its Portland operations in June and gut its remaining workforce.

It's unclear whether production will ever start back up, or whether the state will recoup millions of dollars in incentives meant to fuel the company's growth and create hundreds of well-paying jobs.

The development apparently came as a surprise Monday to the two state agencies charged with tracking its performance.

Solar industry analysts, though, have long anticipated its demise. They point to its rush to market -- hurried along by eager government officials and private investors -- with an expensive product that was only partly developed, and just as the solar market was tanking.

"It's really so unfortunate," said Paula Mints, founder of SPV Market Research in San Jose, Calif. "I do feel bad for the SoloPower people and for the loss of jobs in Oregon."

The California company's Portland operation was already on the decline. SoloPower executives and public officials had projected the first manufacturing line would start up in early 2012, with enough work to keep 140 employees busy. Once the planned $340 million factory was complete, its workforce was to grow to 450.

In September, it employed about 60. By February, a former employee figured, some 20 to 25 remained.

In a

Wednesday and released to the public Monday, SoloPower's chief legal officer Julian Biggs said that a "significant downturn in business and the need for a major reorganization" prompted the move to layoff 29.

"SoloPower's decision to reduce its operations in the Portland facility is expected to be permanent," as of June 17, the notice said.

Messages left Monday at SoloPower and with a spokesman were not returned.

State officials, too, were working to get in touch with the company, which has received a $10 million loan and a $20 million tax credit. It also is in line for a $197 million federal loan, meant to help fund later stages of growth.

The Oregon Department of Energy, which signed off on the $10 million loan, was unaware of SoloPower's plans to halt production, spokeswoman Diana Enright confirmed. The money was backstopped, in part, by the Portland Development Commission, whose representatives did not return calls seeking comment.

SoloPower in Oregon

Incentives backed by state and local agencies:

$10 million

Small-Scale Energy Loan extended by the Oregon Department of Energy.

$5 million

Portion of the loan guaranteed by the City of Portland and the Portland Development Commission

$20 million

Manufacturing Business Energy Tax Credit, approved by the Oregon Business Development Department.

$13.5 million

Cash value to SoloPower after selling the credits at a discount.

Dana Haynes, spokesman for Portland Mayor Charlie Hales, said the city is waiting to see what happens next. Then-Mayor Sam Adams led the push to line up a $5 million guarantee two years ago, swooping when

appeared vulnerable.

"It sure sounded like a great idea," Haynes said, "then the economy went the way that it went, and it didn't pan out."

SoloPower remains current on the loan, Enright said. Its next payment is due May 1.

Should the company default, the agency is first in line for SoloPower's Portland equipment, Enright said.

The Oregon Business Development Department, meanwhile, issued a statement Monday, saying it is "working with company officials to learn more about their facility plans during this time." That agency, also known as Business Oregon,

for SoloPower last fall. That deal stood to net the company $13.5 million after it sold the credits at a discount.

By all appearances, SoloPower's concept was cutting edge. Instead of making rigid conventional solar panels, the company pioneered gleaming "thin film" sheets that could be produced by the mile. The idea was to roll them out onto big-box roofs that couldn't support the weight of the racks and glass fronts of crystalline silicon modules.

Company executives talked enthusiastically in September when the plant opened.

"My anxiety has switched from, 'Can I get enough customers fast enough?' to 'How can I get those customers satisfied and take advantage of this opportunity?'" said then-CEO Tim Harris.

But Ed Cahill, an associate at Lux Research Inc. in Boston, never saw any customers. He recalls warning SoloPower managers that same month about their prospects. "Largely it had to do with the cost of their modules," Cahill said.

In September, he recalled, SoloPower was asking $1.80 a watt -- more than double the cost of conventional panels, which are priced according to watts produced at peak power generation. By comparison, he said, conventional panels ran about 70 cents a watt.

SoloPower executives and Portland city officials, including then-Mayor Sam Adams at the podium, announce the company's plans to build a Portland solar panel plant.

SoloPower was expensive chiefly because of the clear front barrier layer applied to its so-called flexible-CIGS solar sheets, Cahill said. He said the material, made mainly by just two manufacturers, costs about $40 a square meter versus $6 or $7 for the same amount of glass.

"So the flexible-CIGS players were ahead of their time," Cahill said, "without control over the costs of that front barrier."

In addition, Cahill and Mints said, SoloPower's efficiency -- the amount of sunlight converted into electricity -- was lower than that of both conventional and thin-film competitors.

Arizona-based First Solar, for example, a long established manufacturer of thin-film panels, had about 12 percent efficiency compared with perhaps 9 or 10 percent for SoloPower, Mints said.

Mints believes SoloPower could have succeeded had investors shown more patience. "This company deserved a chance," she said.

SoloPower also reeled in a glutted global solar market that has already claimed many competitors. Just last week, SolarWorld -- the German company with 700 employees in Hillsboro -- announced more losses, postponed its annual meeting and saw its stock plunge to a nine-year low.

In recent months, SoloPower

at its San Jose headquarters and listed millions of dollars' worth of equipment there for sale. Several top executives have left, and a new CEO from its sales ranks was installed this past spring, according to its website.

Live chat

What's next for Oregon's solar manufacturing industry? Share your thoughts and

Tuesday at noon.

As

, workers felt the pain, according to a former production manager at the company. He told The Oregonian that he took a 12 percent pay cut in January.

"(Executives) were pretty clear and up front about that," said the man, who asked not to be identified in fear that it would hurt future job prospects. "They were trying to keep the doors open."

He and several others were let go a month later, on Feb. 27. He estimated 20 to 25 employees remained.

Still, he said, he had high hopes for the company, which he said had made a "huge slew of progress," producing panels on a regular basis by the time he left. "If you're making good product, the assumption is you have orders to fill them," he said.

As questions remain about SoloPower's future in Portland, lawmakers are preparing to weigh

program that the company tapped. House Bill 2472 is up for public hearing Thursday before the Joint Tax Credits Committee.

Chris Scherer, president of the Oregon Manufacturing Extension Partnership, said it's hard to draw a general statement from the problems of one company. While the clean tech sector faces challenges in the short-run, the industry is set up for long-term growth, he said. And if the U.S. wants to compete, government should foster the industry's growth, he said.

"It's not a matter of picking winners and losers, it's a matter of trying to stimulate the marketplace," he said.

--Molly Young and Richard Read