From Business Week:

Solar Panels Get Cheaper

With Congress considering both a cap on carbon dioxide emissions and renewable energy requirements for power companies, utilities are trying to figure out how they’ll produce clean energy. One increasingly viable option: solar panels. Solar is still several times more expensive than wind or natural gas and many times pricier than coal, says John Rowe, CEO of Chicago-based utility giant Exelon (EXC). “But solar is where costs are improving the fastest.” One reason: Supplies of crystalline silicon, the base material used in most panels, are plentiful, thanks to climbing production capacity. On June 8, analysts at Barclays Capital (BCS) said they expect output in 2010 to top 138,500 metric tons, 13% more than originally predicted. At the same time, solar panel factories are now more cost efficient. In a recent issue of Science, the president of panel maker SunPower (SPWRA), Richard Swanson, says it will be possible to make crystalline solar panels for $1 per watt in five years, down from about $1.90 today. Competing thin-film (non-crystalline) panel makers say their somewhat less efficient product will get down to 70 cents per watt.

Either way, the solar power industry is closing in on the long-sought goal of “grid parity”—making electricity for a price that’s competitive, at least in high-priced U.S. markets such as California, where energy is typically produced with natural gas at about 12 cents per kilowatt hour. Clean technology research firm Clean Edge predicts partial parity by 2015.

“We think this opens up a huge market,” says Christopher O’Brien, head of market development at Oerlikon Solar, a Swiss maker of equipment to produce thin-film panels. A short-term problem for the recession-battered solar industry: Many deals are on hold as customers wait to see if they can get stimulus money.