Will solar-cell shortage end in 2008?

SunPower, the fast-growing Silicon Valley solar powerhouse, will come out in the fourth quarter with a solar cell that converts 22 percent of the sunlight into electricity, said Manny Hernandez, the CFO of SunPower.

That's good news for the company. SunPower's current high-performance panels, on average, convert about 20 percent of the light that strikes it into electricity. Conventional silicon solar panels convert about 14 to 17 percent of light.

The theoretical maximum is around 26 to 27 percent, said Hernandez. (A few others have said it could go slightly higher, but most predictions are around this level.)

The company, which is part-owned by Cypress Semiconductor, will produce these panels, the second generation of the company's products, on a new manufacturing line in the company's plant in the Philippines.

One would think that approaching the theoretical maximum would freak out a company like SunPower. In the tech industry, no one likes limits. The company, however, has said that one of the primary, if not largest, competitive battlegrounds in the solar industry will revolve around cost: Who can produce more panels more reliably for less money? Companies that make silicon solar panels are competing with each other as well as with manufacturers of solar panels based on CIGS (copper indium gallium selenium).

CIGS panels are less efficient but could cost less, said CIGS backers. Silicon manufacturers dispute CIGS claims hotly.

Hernandez also said that the shortage of polysilicon, which has impacted the solar industry, could ease by 2008. The shortage began in 2004 and has continued because of growing demand for solar power.

"There is a belief that starting in 2008 the polysilicon supply will start to ease," he said.