Photovoltaic cells (or solar cells) convert sunlight directly into electricity. In 1980, the capital cost of solar cells was about $20 per watt of electricity generated. Technological innovation reduced the capital cost to less than $5 per watt in 2007. Even more recent advances focus on reducing the amount of silicon in each solar cell and employing nanotechnology to keep reflected light bouncing around inside the cell until it is eventually absorbed. These innovations will reduce the capital cost to less than $2 per watt generated, and perhaps as little as $1.35 per watt. In contrast, the capital cost of a coal-fired power plant is about $1 per watt generated.
An alternative approach uses mirrors to focus sunlight to produce steam to drive a generator. A power-tower uses an array of mirrors to focus the sun s rays on an elevated platform. The cost of producing electricity in this way is a bit higher than the cost of electricity from coal-fired power plants, but if coal plants were required to pay a carbon tax a tax based on the carbon they release into the atmosphere solar energy would be price-competitive.
The most intriguing innovation of recent years is a sort of hybrid technology. It uses mirrors, but instead of focusing sunlight to boil water, it focuses sunlight on solar cells. Early estimates suggest the cost of this hybrid technology would make solar power competitive with electricity from coal-fired power plants.