AMERICAN PUBLIC MEDIA/MARKETPLACE June 2, 2008

Affordable solar panels to come Solar power is often left out of the renewable energy equation because of its high cost. But as production catches up, the industry is bracing for a glut. Sam Eaton reports the price of solar panels may drop as much as 40 percent

Renita Jablonski: Solar power is often left out of the renewable energy equation because of its high cost. A supply bottleneck for silicon has been driving prices up for a long time. But now as production catches up, the industry is bracing for a glut. As Sam Eaton reports from the Marketplace Sustainability Desk, that's good news for energy-conscious consumers.

Sam Eaton: On Tuesday, the world's largest manufacturer of silicon semiconductors will announce that it has doubled its capacity following a three-year, $1.5 billion expansion project. Announcements like these are forcing analysts to rethink their cost projections for solar power. The Prometheus Institute for Sustainable Development predicts global silicon capacity will triple by the end of the decade, driving down the price of solar panels by as much as 40 percent. Daniel Esty is a professor of environmental policy at Yale:

Daniel Esty: This is good news for all of us who might like to see cheaper solar panels. It's not so good news for the entrepreneurs and investors who are gonna see much more difficult circumstances for these companies and probably less likelihood of getting a big return on their investment. Esty says unless demand surges, the glut in silicon production will cause a shakeout in an industry that has seen record growth in recent years. But he says the companies that survive are likely to thrive over the long term.

I'm Sam Eaton for Marketplace.

Listen to this story