Silicon Valley-based solar cell manufacturer SunPower Corp. announced today that it’s decided to site its newest manufacturing plant in California, a move that CEO Tom Werner says will create hundreds of jobs and may prompt an “economic cluster” that will attract similar projects.

SunPower has partnered with contract manufacturer Flextronics, and plans for the Milipitas-based operation to be up and running by the end of the year, producing high-efficiency solar cells.

Werner and Flextronics CEO E.C. Sykes were joined at the announcement in Milipitas by Gov. Arnold Schwarzenegger, who sported a green tie and chastised the assembled crowd for not celebrating Earth Day with similar fashion choices.

“I am so excited about this,” said Schwarzenegger about the new project. “This proves that protecting the economy and protecting the environment can be done simultaneously.”

Werner said locating the manufacturing operation in California makes sense both for economic reasons and because California is home to a large solar market, thanks to  the state’s Renewable Portfolio Standard, requiring 33% renewable energy by 2020, and the Million Solar Roofs Initiative.  Werner added that a record 50 megawatts of rooftop solar power were installed last month in California.

“You want to be close to your customer for logistical reasons, and also because you learn from your customer and you build it back into your product,” Werner told me following the staged media event.  “And by being local you can learn faster than you can if you’re distant.”

Other California selling points were a green manufacturing equipment sales tax exemption, which enabled SunPower to buy equipment for the facility tax-free, and low-interest loans from Recovery Act funds granted through the City of Milpitas, said Werner.

Governor Schwarzenegger used the occasion to warn Californians against taking the state’s environmental laws for granted.

“Right now there are greedy Texas oil companies that want to come in here and spend millions of dollars to roll back AB 32 (the state’s 2006 carbon legislation) and our other environmental laws,” he said. “Why? Because they don’t like that there’s alternative energy being created.  They don’t like what you are doing here.”