As Cost Goes Down, Solar Energy Rises by Jim Ostroff

Solar power is getting cheaper, edging it closer to being cost competitive with electricity generated by burning fossil fuels. For firms and homeowners in California and the Southwest, the cost of solar-cell power will fall 25%, to 25¢ per kilowatt-hour (kWh), by 2011.

In 10 years or so, power providers in the West, South and Mid-Atlantic regions likely will pay 12¢ to 15¢ per kWh for electricity from sun farms and rooftop solar panels.

Solar power's appeal is getting a boost because of escalating costs to produce conventional power with coal and natural gas, whose prices are moving nearly in tandem with soaring oil prices. It's a prime reason why electricity prices have jumped as much as 50% in less than a decade to around 11¢ per kWh or so and will continue to rise. Utility companies know they face even steeper production cost hikes when carbon dioxide (CO2) emissions limits are phased in during the next decade, effectively requiring them to cut back on coal usage and buy credits to offset CO2 made by burning coal. That's why they will be eager buyers of noncarbon-emitting solar power.

Meanwhile, technological advances are driving solar volt costs down to earth by boosting cells' efficiency at converting sunrays into electricity and slashing costs of making and installing systems. This is getting a big push from manufacturing powerhouses, such as Applied Materials and IBM, which are building production lines -- with huge economies of scale -- to make solar power cells.