Out here on the Left Coast, my little town just announced a 20-year deal to put solar panels on the roof of the local high school. Electricity is so expensive here that even first-generation solar will cut the school district's payments almost in half. But first-generation solar is starting to look long in the tooth. Built using a clean-room process that's practically identical to the one for CPUs, these expensive crystalline silicon wafers are the core of most solar applications.

Second-gen solar technology places a silicon film on glass or plastic and uses only about 1 percent of the silicon of the older units per watt generated. But these energy-efficient panels are really only cost-effective in large-scale deployment, because their vacuum-based production process is quite susceptible to manufacturing glitches.

A real breakthrough has appeared with solar's third-gen technology: thin-film solar panels. What's so special about this technology? Instead of growing and slicing silicon ingots, or vacuum-based glass etching, specialized printers spew nano particles onto rolls of thin, flexible material through a futuristic mashup of ink jet printing technology, aluminum foil, and space-age chemical compounds.

Third-gen solar factories create panels for a fraction of the cost of earlier generations. The first thin-film ink jet–based panels started rolling off Nanosolar's assembly line here in Silicon Valley last December.

A handful of start-ups are racing to dominate this exciting market, but Nanosolar has taken an early lead. The company claims incredible pricing for its panels: as little as $1 per watt, compared with around $4.50 for traditional solar cells. That's roughly equivalent to using fossil fuels—the holy grail for solar power. Even though the efficiency of these new thin solar panels is lower than that of previous generations, their incredibly cheap price, coupled with their flexible nature, will usher in much wider use of solar power. Nanosolar's entire 2008 production run has already been snapped up.

A good chunk of it will go toward covering a field in Germany with solar panels. The energy they generate will power a wide swath of nearby homes. Nanosolar hopes to revolutionize power generation by enabling this 10-megawatt solar power plant to bloom in under a year, as opposed to the ten years needed to build a traditional coal, gas, or nuclear plant.—Next: Another Exciting Early Application >