Photovoltaic (PV) power technology uses semiconductor cells (wafers), generally several square centimeters in size. From the solid-state physics point of view, the cell is basically a large-area pn diode with the junction positioned close to the top surface. The cell converts sunlight into DC. Numerous cells are assembled in a module to generate the required power (Figure 8.1). Unlike the dynamic wind turbine, the PV installation is static, does not need strong tall towers, produces no vibration or noise, and needs no active cooling. Because much of current PV technology uses crystalline semiconductor material similar to that of integrated circuit chips, the production costs have been high. However, between 1980 and 2004, the capital cost of PV modules per watt of power capacity has declined from more than $20 per watt to less than $4 per watt (Figure 8.2). During the same period, the cost of energy has declined from almost $1 to about 20 cents per kWh at present (Figure 8.3), and is expected to decline to less than 15 cents per kWh by the year 2010. The cumulative installed capacity in the U.S. has risen from nearly zero in 1980 to approximately 200 MW in 1996, and exceeded 1000 MW in 2004 (Figure 8.4). The world’s cumulative installed capacity of PV systems was about 300 MW in 1996, which grew to 800 MW by 2000 and 1330 MW by the end of 2002 (Figure 8.4). The annual growth rate of PV installation rose from 20% in 1994 to 40% in 2000.