For the last few years, the costs of photovoltaic panels have been overwhelmingly controlled by the price of silicon. More than half of the world's constructed silicon crystals are converted into solar panels, and since solar power's recent resurgence, demand for silicon has far outpaced supply.

Building a silicon manufacturing plant is no small (or environmentally insignificant) job. But the higher prices have lead to a huge investment in production, and it's starting to look like we might actually soon have something besides the cost of silicon defining the costs of panels.

Many solar manufacturers have taken supply issues into their own hands by building their own silicon plants. It looks like 2009 should be a turning point for the supply of silicon. The result will be a fairly significant drop in the price of solar panels, and an increase in the amount of panels being produced.

But this silicon shortage has had broader implications than short-term price hikes. The introduction of new, thin-film technologies that don't use any silicon could make silicon panels less competitive at any price. But silicon remains the true high-volume photovoltaic technology. We'll have to wait until next year to see how the end of the shortage affects prices, and whether thin film technology can continue wheedling away at silicon's market dominance.

Via CNet

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