As part of some work I've been doing with a friend considering changing industries, I have been looking further into solar energy - specifically Photovoltaics (PV).

A brief overview:

PV solar energy is the use of semiconductors to create electricity from sunlight. The physics are not directly relevant to those not wonkish, but what is of importance are the following:

1) materials
2) efficiency

On the materials side, there are a number of choices including polycrystalline silicon, monocrystalline silicon, microcrystalline silicon, gallium arsenide and progressively more exotic material types.

By far the most common is silicon.

At this point a brief detour into wonkdom is necessary: the poly, mono, and micro silicon variants provide the substrate or base to the device. Consider it the equivalent of the base of a table or building.

In order to perform, the silicon (of whatever type) is then both doped (impurities added to increase/decrease specific electrical properties) as well as built upon (layers of wires or other structures).

Thin film is another term often used - it merely refers to a different way of laying down the layers. The analogy of thin film vs. 'normal' processing is that thin film is like painting a car without stripping and priming it first: quicker, cheaper, but generally not as high quality.

This brings us to efficiency:

Efficiency is the ratio of how much energy in a given 'amount' of sunlight is actually captured by the PV panel and transformed into electricity.

Industry averages right now are around 20% with actual install base ranges from 12% to 18% (Wiki)

Now for the economics part:

Depending on the material, the actual effective efficiency of a PV panel degrades over time. The reason is that the dopants (impurities) added as well as the structure of the PV device itself will change with temperature changes as well as more fundamental electrical effects.

For poly and microcrystalline devices, this means 50% decrease in throughput over a 30 year time span. This isn't speculation - this is straight out of the labs from someone who has a PhD in this field and has been working creating devices serving this field for 15 years.

Single crystal in contrast will see significantly lower degradation.

In economics terms: an installation serving the typical family (900 Kilowatt hours/month) at install time will see the solar installation failing to meet the family's needs in 10 years or less.

Now consider that the average family must invest in order to afford this installation:

http://www.chelanpud.org/documents/SNAP_ASES_Paper.pdf

According to this study, the cost for a 1 kilowatt installation is about $9000 per KW. Assuming 8 hours a day, 30 days a month, a 25% margin, and a 25% loss due to storage, transmission, or other factors, the required installation is 900/240*1.25*1.25 = 5.86 Kilowatts = 6 Kilowatts = $54000.

This is a chunk of change. But factor in the efficiency decline, and the install cost factor rises considerably.

This is a fundamental problem with the economics of solar energy as a primary energy source.

Fortunately the friend's startup has a much different business model - actually looks very promising even from my point of view.