Solar power should become a mainstream energy choice in three or four years as companies raise output of a key ingredient used in solar panels and as China emerges as a producer of them, according to a report by an environmental research group.
"We are now seeing two major trends that will accelerate the growth of photovoltaics: the development of advanced technologies, and the emergence of China as a low-cost producer," Janet Sawin, a senior researcher at the Worldwatch Institute and an author of report, said in a statement.
Investors have flocked to solar and other renewable energy sources amid worries about the high costs of oil and natural gas and greenhouse gas emissions. Solar is the fastest growing energy source, but still provides less than 1 percent of the world's electricity, in part because its power can cost homeowners twice as much as power from the grid.
But costs could fall 40 percent in the next few years as polysilicon becomes more available, Sawin said,
More than a dozen companies in Europe, China, Japan, and the United States will boost production over the next few years of purified polysilicon, which helps panels convert sunlight into electricity, and is the main ingredient in semiconductor computer chips, according to the report.
Polysilicon's feedstock is abundantly available sand. But a downturn in silicon refining after the high-tech bubble collapse in the late 1990s has constrained the panel market.
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In some of the world's sunniest places, like California, electricity from solar panels costs the same as power from the grid. A drop in solar panel prices could expand that to places that only get average sunlight, making solar more of a mainstream choice, Sawin said in an e-mail.
Last year, China passed the United States to become the world's third largest producer of solar panels, trailing only Germany and Japan.
"To say that Chinese PV producers plan to expand production rapidly in the year ahead would be an understatement," Travis Bradford, president of the Prometheus Institute, a Massachusetts-based group that promotes renewables, said in a release.
"They have raised billions from international IPOs to build capacity and increase scale with the goal of driving down costs," said Bradford, who helped write the report.
Many companies are producing thin-film solar technologies that cut the amount of silicon used in panels. Thin-film could grab a 20 percent share of the market by 2010, up from 7 percent of the market in 2006, the report said.
Copyright © 2007 Reuters Limited.