Now for what the article says on solar costs which I would also contend is not correct . . .

Applied Materials' Mr Gay points out the cost of generating solar power falls steadily over time. The first cells, in satellites, cost about $200 per watt of generating power. By last year the price had fallen to about $2.70 per watt. That equates to a price decrease of about 18% every time production doubles, he calculates. Price decreases come inexorably with volume, he argues, so subsidies simply help to speed the process up by stimulating extra sales.

I'd like to know how the figure of $2.70 a watt is reached, I suspect this is a factory output cost. The best indication of solar prices - that I know - is the Solar Buzz Index. It very clearly shows that in its 4 year history, prices have basically, net-net, not moved from $5.60 in July 2002 to $5.47 this November 2006.

Add to that, the clear fact that although production has increased and indeed quadrupled since 2001, we have not seen the lowering in prices as decribed by this equation - 18% for every doubling. It is the last few years that matter, because before that this was a very tiny industry.

Annual solar pv production figures

2001 - 395 MW
2002 - approx 500 MW
2003 - 744 MW
2004 - 1200 MW
2005 - 1727 MW

Price decreases will come with volume - ordinarily - but the solar market is anything but free. Manufacturers may be banking the price falls for themselves and not passing them onto consumers. The fact is that government intervention through subsidies has actually served to keep prices high because the subsidy has worked in the reverse interest of the consumer to the producer.

All this goes to show that prices of alternative energy will over a long enough time period fall, but nothing like in a straight line and they will go up too on the way down. The worst thing anyone can ever do to alternative energy is to overstate the case. The solar industry's constant recitement of the fact that increased production reduces prices is flat wrong and no amount of repetition will make it any more right. Subsidies have in fact kept prices high because they have made it profitable to stay in a frothy silicon market, when alternative feedstocks to silicon could have been invested in which very likely could have delivered lower costs.