Hoku Scientific Inc., the Kapolei-based maker of components for hydrogen fuel cells, announced plans yesterday to build a $250 million factory to manufacture electricity-producing solar panels and the silicon component needed to make them.

Hoku's announcement was short on some details -- including precisely how the facility would be financed and where the factory would be located in the world -- but the company's plan would address what analysts say is a very real shortage of photovoltaic electrical cells and the material that goes into them.

The project would mark a huge step forward, as well as a whole different technological field, for the tiny startup that makes parts for hydrogen fuel cells. During the fiscal year ended in March, Hoku parlayed contracts with the U.S. Navy, Sanyo Electric Co. Ltd. and Nissan Motor Co. Ltd. into net income of $1.3 million on revenue of $5.5 million.

Although Hoku has produced profits rare for a high-tech startup and has carved out a timely foothold in the alternative energy business, Hoku's investors have ridden a roller-coaster ride in the past year. The company's stock price has swung from around $13 a share in October to below $4 earlier this month. Hoku closed yesterday down 25 cents at $5.20 per share.

Today, the company's chief executive, Dustin Shindo, is scheduled to take Hoku's new story to Wall Street when he makes a presentation at the 34th Annual Cowen & Co. Technology Conference in New York. Tomorrow, Hoku will host a conference call with investors to discuss the proposed project.

The project is meant to diversify Hoku within the renewable-energy realm.

"While the market for fuel cell technology products is still emerging, the solar market is already a rapidly growing industry," Shindo said in a statement.

The market is so established that demand is beginning to outstrip supply of photovoltaic electrical cells. Today Actus Lend Lease LLC is scheduled to unveil the first of several thousand new homes it is developing on military bases in Hawaii in partnership with the Army. Rooftop arrays of photovoltaic cells will generate enough electricity to provide about a third of the developments' electricity needs.

The military project's developers have said they were fortunate to forge deals for the photovoltaic equipment before a recent surge in demand caused by rising oil prices and energy policies adopted by Germany and other nations that had led to the rapid development of solar electric projects. That rising demand has caused prices to soar.

The scarce supply means that "companies are willing to prepay for this key material," said Scott Paul, Hoku's vice president of business development. That means Hoku could use cash down payments or contracts from customers to help finance the quarter-billion-dollar factory. Paul said it was premature to discuss how a financing deal would be structured; however, Hoku said it would be done through some combination of debt and pre-sold material.

The plan calls for Hoku to set up two new divisions. Hoku Solar would make and sell polysilicon-based photovoltaic modules. Hoku Materials would make 1,500 metric tons of polysilicon material per year; about 300 tons would be supplied to Hoku Solar and the rest sold to other photovoltaic manufacturers.

Hoku said it is exploring basing its new facility in Singapore but has made no decision. Paul said high land costs make Hawaii less attractive.

"All things being equal we would love to stay in Hawaii, but of course not all things are equal when it comes to making a project of this size," he said.