Some 30 years ago, forecasters predicted solar would take off as a viable solution to the global energy crisis. If recent projections feel like déjà vu, you’ll realize how much work is still cut out for the très chic solar industry.

Research labs across the globe, many funded by government agencies, are making headway in the race to improve solar panel efficiency. But the ultimate goal of decreasing the global demand for fossil fuels through widespread use of solar energy is still five years off, if you ask some optimistic solar industry experts. The U.S. Department of Energy and other organizations worldwide give a more conservative projection of at least 10 years.

The solar industry’s challenge is to develop the smallest, most efficient and least expensive device possible. It’s the same concept employed successfully by the computer industry. So far, there’s nothing on the market that meets all three criteria and can compete effectively with traditional energy sources. 

“The amount of [solar] installed worldwide is only a tiny fraction of the coal or nuclear” being generated, says Carl Osterwald, a solar test engineer with the U.S. National Renewable Energy Laboratory (NREL) and former chairman of an international solar standards committee.

Government policy is helping to change that. In the United States, for instance, the DOE’s new solar initiative aims to reduce the cost of installed solar power in the country by 75 percent by the end of the decade. At $1 per watt -- 6 cents per kilowatt-hour -- most industry analysts agree solar-generated electricity power could compete with coal-fired electricity. 

California is the top solar market in the U.S. while Germany leads the world. They attribute their success to government incentives for the use and development of solar energy. Such incentives offer a financial return on solar investment and spur further solar improvements, eventually driving down the cost and the need for subsidies, the same goal of the DOE initiative.

It would seem the cleanest, most abundant renewable energy would be easier to harness. Not so.

For starters, only about half of the energy from sunlight captured by solar cells is useable. Combine that with the high cost of manufacturing such precisely designed energy devices and you begin to understand why solar panels have only reached an efficiency of 30 percent.

Developing solar panel efficiency requires a precise tweaking of material, lighting conditions and other variables. With efficiency, the same amount of energy can be produced by a smaller array of solar panels.

The most efficient solar panels so far are based on single crystalline silicon cells. Some of the conceptual breakthroughs, in such areas as nanotechnology, coatings and manufacturing, promise to make solar panels more than twice as efficient as existing methods and potentially cost competitive with oil.

Stanford University engineers, for example, are trying to combine the sun’s light and heat to generate electricity that would double the efficiency of existing solar technology. The new process succeeds at higher temperatures where current technology typically becomes less efficient. Plus, the materials used in the process are cheap and easily accessible, making the generated power affordable.

Stanford researchers also are among those experimenting with semiconductor nanocrystals or quantum dots, which can reach much higher efficiency than traditional solar cells.

In the Netherlands, Eindhoven University of Technology is using nanotechnology and a mirror system that concentrates sunlight to improve efficiency and cut costs. The researchers expect their nano solar cells to become more than 65 percent efficient within 10 years.

At this point, the majority of top manufacturers are from China and Taiwan, according to Solarbuzz, a global market research company focusing on solar energy. Chinese manufacturers account for more than half of global solar cell production, Solarbuzz reports.

Solar panel efficiency worldwide certainly has come a long way since the energy crisis of the 1970s, when finding an alternative power source was a prime global concern like it is today. The industry experienced a slow, steady growth until the mid ‘80s when solar tax credits expired. The green movement of the past 10 years, coupled with unstable oil prices, fueled the resurgence in solar energy’s appeal.

As the demand for solar energy continues to grow, costs will decline as a result of manufacturing technology improvements and increased solar panel efficiency.

Still, more science, engineering and government policy change is needed before solar cells can expect to double their efficiency and play ball with traditional energy providers.