Photovoltaic (PV) systems that directly convert solar energy into electricity are still too expensive to compete on an equal basis with gridsupplied electricity from conventional sources, but the gap has been narrowing in recent years. Mainstream implementation of PV technology for large-scale energy production is challenged by intermittent daytimeonly electricity output, and the PV industry's still-developing technology and manufacturing infrastructure for converting sunlight into electricity.
To overcome these challenges, the industry is committed to further lowering costs by enhancing automated production equipment and systems for manufacturing solar cells and modules. The improved economies of scale that will naturally result from these steps will signifi cantly increase output and reduce the production costs of solar PV systems. To accelerate this trend, experts are urging the industry to take on the gigawatt challenge; i.e. creating highly effi cient module factories capable of producing a Gigawatt peak (GWp) of PV electricity generating capacity annually. In addition, the industry acknowledges the need to achieve better conversion effi ciencies for both silicon wafer-based and thin-fi lm PV cells, while continuing to develop new, even less expensive technology solutions for PV cells and modules.
Ambitious subsidy programs
These challenges are well within the industry's capabilities, as previous eff orts to narrow the cost gap between fossil-fuel-based electricity and solar energy indicate. The industry's continuous technological innovations and improvements, increased cell conversion effi ciencies and improved PV system reliability (with lifetimes of 20 to 25 years) have combined over the past 15 years to reduce the average cost of electricity from PV by 5% per annum. The European Photovoltaic Industry Association (EPIA) now expects PV electricity generation to become cost competitive with conventional forms of electricity within the next 7 years, and to be worth more than β¬300 (US$441) billion a year by 2030. Currently, solar PV systems contribute only minimally to the world's electricity needs, except in a handful of countries such as Germany and Japan. There, government-supported programs, such as Germany's 1,000 Roof and 100,000 Roof programs and Japan's Residential Roof Program, have accelerated development of the alternative power source since the early 1990s. In Germany, thanks to low-interest installation loans and the feed-in program requiring utilities to buy back PV-generated power at attractive rates, 300,000 PV systems were installed as of the end of 2006. Other countries, though slower in getting out of the starting gate, are also now making strides. Industry experts predict the USA in particular, could be a standout over the long term. Several US states have enacted ambitious subsidy programs, including California's 10-year, US US$3.3 billion solar incentive program. California hopes to supply 20% of its electricity needs with solar energy by 2010, while other states like Arizona, Texas, New Jersey, Pennsylvania and Maryland, have committed to fund the installation of some 10 GWp of additional solar electric generating capacity over the next 15 years through billions of dollars in subsidies.