"In the last 20 years, the cost of solar has come down almost 90 percent. That is occurring due to improvements in technology and scale of manufacturing," Rhone Resch, president of the Solar Energy Industries Association, told Reuters during an industry conference this week.

The growing interest in solar power and other renewable fuels coincides with the government's move to bolster energy security by reducing US dependence on foreign oil.

Resch said solar's penetration of the energy market could soar from a fraction of 1 percent of all electricity generated currently if costs continue to fall.

"It is reasonable to say that within 20 years solar will be generating 5 percent of the electricity in this country," he said on the sidelines of Piper Jaffray's Opportunities in Alternative Energy Symposium.

Energy from solar panels currently costs 22-40 cents per kilowatt-hour, compared with the national average consumers now pay of 11 cents per kilowatt-hour from traditional sources.

FOREIGN COMPETITION

Innovation and lower manufacturing and installation costs will make solar-generated electricity competitive with other sources of power supplied to the grid, experts said.

Solar panels cost residential consumers about $7 to $10 per watt and commercial buildings $5.50 to $7.50 per watt, compared with over $100 per watt in the 1970s.

"Technology improvements are driving down the cost to grid parity," Shawn Qu, chief executive of Canadian Solar Inc., said during a conference presentation. "We are still in the middle of impressive growth for the solar industry."

Parity could be reached in 10 years if prices for traditional fuels continue to rise, Resch said.

Despite the potential for a boom in solar energy use, experts say the United States is falling behind in manufacturing solar panels.

Foreign producers are growing in part due to government subsidies and, in the case of China, lower manufacturing costs.

The US share of global panel construction has fallen from 20-25 percent about four years ago to about 8 percent now, while Japan and Germany have increased their output. China has increased its market share from about 1 percent four years ago to 8 percent now.

"We see that as a legitimate concern. We are developing very valuable manufacturing here in the United States," said Craig Cornelius, technology manager for the US Department of Energy's Solar Energy Technologies Program.

"We're hoping that we can preserve that technology advantage because some of those same countries that have been subsidizing capacity expansion are also funding aggressive research and development programs."