Tech Industry

Getting the price right for solar

To be competitive, solar-panel makers are ramping up manufacturing, betting that economies of scale will translate to lower costs.

The solar industry is finding that size matters.

Suppliers of solar photovoltaic (PV) panels are in the midst of a multiyear investment boom, with an eye toward producing electricity as cheaply as the entrenched standard: fossil-fuel power generation.

Electricity from PV panels now costs substantially more than power from conventional fossil-fuel sources. Industry executives say, however, that ramping up the volume of panel production--regardless of any solar cell technology improvements--will bring solar closer in line with today's power rates.

"We have to cut the cost in half of where we are today, and we can do that with a lot of the technologies and solutions available to us today," said Charlie Gay, vice president and general manager of Applied Material's solar business group, while speaking at Massachusetts Institute of Technology's

Speaking at the MIT solar power panel, Swanson said the company expects to reduce the total cost of buying panels by 60 percent by 2016. About half of those savings will come by lowering installation costs, he said.

"The low hanging fruit is the cost of putting panels on the roof," he said. "The costs have been coming down to the point where we're close to grid parity, but we're still a factor of two away."

One technique for reducing the installation cost comes in integrating solar cells into roofing materials or tiles, so the solar components are installed at the same time as the roof. PowerLight, which SunPower bought last year, has already signed deals with home developers to build homes with its tiles.

Financing can go a long way to making solar power more attractive as well. Although they eventually pay for themselves, a solar PV system for a home can cost $20,000 to $40,000 before rebates.

"We're cutting the net cost in kilowatts per hour by 35 percent just by financial innovation, and we get another 15 percent in delivery innovation," said