ALBUQUERQUE — A German company broke ground Monday on a plant here that will manufacture solar equipment, and state and local officials are looking to the venture to help make New Mexico a leader in the renewable energy industry.

Schott AG of Mainz, Germany, said the plant will produce both photovoltaic panels and receivers for solar thermal power plants. Initial plans call for a 200,000-square-foot facility that will employ about 350 people.

Gov. Bill Richardson described the project as historic, saying incentives offered by the state and local governments aimed at attracting major companies have paid off with Schott's decision to invest in New Mexico.

Earth work has already begun on Schott's plant, and company officials expect production to begin in spring 2009. As demand for renewable energy sources grows, the company said plans include expanding the plant to 800,000 square feet and employing as many as 1,500.

Schott's initial investment will be $100 million. That's expected to grow to $500 million over the next few years.

Schott estimates long-term economic development stemming from the plant could reach more than $1 billion.

Schott is a leading manufacturer of solar technology equipment, but it also makes a wide variety of other products, ranging from glass used in oven doors, fiber optics and syringes. The company has operations in 41 countries, employs 17,000 people and has global sales of about $3 billion.

The Albuquerque plant will be located at Mesa del Sol, a commercial and residential development south of the Albuquerque International Sunport.

The plant will make solar panels, which convert solar energy into electricity, and receivers used in utility-scale concentrated solar thermal plants. Mirrors focus the sun's rays onto the receivers, which warm fluid that goes to a heat exchanger to produce steam for turbines to generate electricity.