As Energy Costs Soar, US Looks to Solar

Apple is considering harnessing the sun to power its iPod music players. California's Ironwood prison is installing more than 6,000 solar panels, and Boston's Fenway Park is tapping solar power for Red Sox baseball games.

After decades on the fringe, solar power is closing in on America's mainstream as surging fossil fuel prices and mounting concern over climate change spur states, businesses and homeowners into a quickening embrace with alternative energy.

Eric Risberg / AP

Panels bolted to roofs to convert sunlight into electricity are still too expensive in most regions to compete with cheaper, less environmentally friendly fuels like coal without generous subsidies. Solar's high costs have kept the resource out of reach for many residences and businesses.

But not for long, industry analysts and scientists say.

The tipping point at which the world's cleanest, most renewable resource is cost-competitive with other sources of energy on electricity grids could happen within two to five years in some U.S. regions and countries if the price of fossil fuels continues to rise at its current pace, they add.

"In the long run—as in two to three years—you should see competitiveness especially with the grid in a number of regions in the world," said Vishal Shah, an analyst who tracks the industry at U.S. investment bank Lehman Brothers.

Tom Werner, chief executive of SunPower , the largest North American solar company by sales, sees such "grid parity" for solar power in the United States and elsewhere happening in about five years, or possibly as soon as 2010.

"That's actually more aggressive than what we would say previously, and that's because the cost of electricity is going up faster than we had ever modeled," Werner said an interview at the Reuters Global Energy Summit on June 3.

"It is becoming more and more clear it is a real possibility, and we believe, a reality," he said.

Richard Feldt, chief executive of U.S. solar panel maker Evergreen Solar , calls grid parity the industry's "Holy Grail" and sees it happening in about five years. "It's not far away," he said in an interview.

Suntech Power Holdings , one of the largest of a growing number of Chinese solar companies, sees the same five-year timeline, thanks to increasing supplies of silicon that will help drive down costs.

In the United States, much depends on November's U.S. presidential and congressional elections.

A Democratic win of the White House, and possibly greater Democratic control of Congress, could spur aggressive U.S. measures to limit climate-warming emissions of carbon dioxide—including legislation opposed by President George W. Bush that would cap emissions from 86 percent of U.S. facilities.

If passed, such cap-and-trade provisions would make it costlier to emit carbon into the atmosphere and discourage the burning of fossil fuels. The economics of solar and other cleaner energy sources would be more competitive.

Democrat Barack Obama wants to require U.S. utilities to generate 25 percent of their electricity from renewable sources like solar by 2025. Republican John McCain has campaigned on his support for alternative energy sources, but Democrats have questioned his voting record on those issues in Congress.

"Obama or McCain would be better than Bush," said Feldt.

CONTINUED : Boom to Bust?

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