A report last week from MIT's Technology Review points out that we've been experiencing a severe silicon drought in the US since 2005. Capacity to extract and produce silicon, long used for semiconductors and in microtechnology, has not kept pace with the increasing demand--especially for the type of silicon used in solar panels. So even as support for generating solar power has lifted the industry out of infancy, prices for solar-generated energy have remained about three times that of regular electricity. There's been an 80-cent hike in the price per watt since 2000. And of course, any continually increasing production costs are a body blow to an important industry not yet at scale.
Happiliy, global supply of silicon is set to increase as much as tenfold in the next 20 years. Subsidized solar industries in nations like Germany, Spain, Japan and the US have allowed demand to creep up (though some report that there is a shortage of qualified solar technicians and workers as well), and expanded production capacity is already afoot. This should lead to sharp per-watt price drops. Travis Bradford at the Prometheus Institute projects that in sunny areas, the price of solar could match the cost of regular electricity by 2010.
It's a big leap, however, to begin the process of taking alternative sources of energy into a free market. It's a competitive advantage, of course, especially given reports that India's abundant corps of talented engineers could make it into a serious clean-tech player, and the growing opportunities for solar in local markets in China (now third, having surpassed the US in solar electricity production in 2007). The current American solar subsidies don't necessarily hurt the mission, but they must accompany political pressure to get the solar infrastructure demanded and built if we're to make the industry an competitive part of a green economy.