Solar power, after years on the fringe of society, is beginning to enter the mainstream, and may become competitive as soon as 2010. Is the industry ready?

Solar power has been fighting the good fight for clean energy for as long as most of us can remember; we were recently told by a graphic designer friend that they picked up a pamphlet on passive solar in 1973 and have been waiting ever since. While passive hasn’t exactly caught on, photovoltaic cells have become increasingly popular in the face of rising energy costs and eco-consciousness; despite the strong showing by solar providers last year–SunPower rose 253 percent in 2007–they’ve been fighting to remain competitive in the face of the high cost of silicon, a key component of PV cells, and the only thing standing between the coal industry and oblivion.

Silicon? How are we short on sand?

Silicon, which drives the cost of solar cells, has become increasingly scarce in light of a production shortage over the last several years; with polysilicon producers being pressed by computer manufacturers, the 47% increase in solar power orders in 2005 alone has created a worldwide shortfall. Now, however, the end is in sight: the CEOs of three major American solar companies were in agreement that the crisis was going to end in the next three years. The result of solar fighting to achieve gains against the market, and suddenly finding the most expensive component falling like a stone? Overnight grid parity, putting solar on a level playing field with coal, the ultimate in cheap but dirty fuels that have been able to hold off solar based on cost per kilowatt hour for a generation.

But don’t celebrate just yet

The more pressing question for the solar industry is how to deal with that prosperity–as prices fall, companies could see their margins stressed to the breaking point, especially silicon producers that haven’t invested heavily in the thin-film technology expected to power the panels of tomorrow. Without the silicon producers, the market is likely to enter another period of shortfall, and press the 25 states that demand 30% of all energy be clean in the coming 15 years. Despite the threat of instability, however, the solar panel makers seem prepared to meet this challenge head-on; the cost of energy is rising faster than it was ever modeled, and, in the words of Richard Felt, Evergreen Solar CEO, “McCain or Obama would be better than Bush.”

More Reading:

As Energy Costs Soar, US Looks To Solar (Reuters)
World Silicon Shortage Hits Solar Power Hopes (Financial Times)
Thin-Film Solar Technology Could Be Seriously Clubbing Fossil Fuels In Ten Years (Treehugger)

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