Forecast for solar power: Sunny

ByABC News
August 28, 2007, 10:34 AM

— -- Solar power has long been the Mercedes-Benz of the renewable energy industry: sleek, quiet, low-maintenance.

Yet like a Mercedes, solar energy is universally adored but prohibitively expensive for most people. A 4-kilowatt solar photovoltaic system costs about $34,000 without government rebates or tax breaks.

As a result, solar power accounts for well under 1% of U.S. electricity generation. Other alternative energy sources, such as wind, biomass and geothermal, are far more widely deployed.

If that happens, solar panels would become common home and business appliances, says Brandon Owens of Cambridge Energy Research Associates.

Innovations led by semiconductor firms and a new crop of "thin-film" solar makers wring more power from sunlight, use less silicon to make panels and make factories more efficient.

Venture-capital firms pumped $264 million into solar companies in 2006, up from $64 million in 2004, research firm Clean Edge says. The start-ups also have benefited from $159 million in U.S. research grants this year, largesse from efforts to reduce power plants' global-warming emissions.

Sharp price swings

High costs of solar panels have been due to volatile silicon prices, low production volumes and high setup costs.

Solar panels generate electricity when photons in sunlight knock loose electrons in silicon the same material used in PC chips. The silicon is sandwiched between two metal plates; electrons flow from one to the other.