Direct applications range from powering small devices like pocket calculators and watches to lighting and heating homes, and some 60 percent of solar power produced is used to provide power to national electric grids.

Found in quartz and sand, silicon is the second-most abundant element on Earth after oxygen. But processing the material is complex and expensive.

Soaring oil prices and competition for silicon from computer chipmakers have prompted a race to develop new ways of producing solar-grade silicon material more cheaply.

As chipmakers enjoy a recovery in their industry, the price of high-purity silicon - as cheap as $6 per kilogram (2.2 pounds) during the semi-conductor slump - has leaped tenfold.

But the purity of silicon needed for solar is not as high as that needed for microchips, and it is this market that companies such as Germany's Wacker Chemie want to exploit.

Wacker, 51 percent owned by the Wacker family and 49 percent by French-German drugmaker Aventis, believes it is ahead of the game with a process it has developed for solar-grade silicon at its main plant in Burghausen on the German-Austrian border.

"Of course some competitors may say it's not worth our while, but we have given a real commitment that we will invest specifically for pv (photovoltaic cells)," Ewald Schindlbeck, polysilicons director at Wacker Chemie, told Reuters.

Among other companies in the race are Joint Solar Silicon, a joint venture between Degussa and Deutsche Solar, and U.S. company Hemlock - a joint venture between Japan's Shin-Etsu and Mitsubishi and Dow Corning of the United States.

Norwegian metals company Elkem, the world's biggest producer of impure silicon, also says it has found a new refining method and has said it plans to make an announcement in January.

TOUGH COMPETITION

Power can be produced from traditional fossil fuels about four or five times more cheaply than solar. Just a fraction of 1 percent of the world's electricity consumption is currently generated with solar power, which is heavily subsidized to allow it to compete.

As the cost of silicon accounts for some 40 percent of the price of a solar installation, Michel Viaut, general secretary of the European Photovoltaic Industry Association lobby group, says an affordable supply is the only way of giving the solar industry a chance to compete.

Wacker thinks it has the answer. It says its new method can produce purified silicon of a high enough grade for the solar industry one-third more cheaply than the traditional, so-called "Siemens" process - and be ready to go into commercial production in 2006.

The traditional process involves reacting a hazardous liquid form of silicon, trichlorosilane, with hydrochloric acid at temperatures of more than 1,832 degrees Fahrenheit to create ingots of pure silicon around silicon rods.

It is a stop-start process that has to be halted to allow cooling and harvesting of the ingots, which are then crushed and cleaned.

NEW METHOD

Wacker's method uses milled silicon seed particles on a so-called "fludized bed" instead of silicon rods, giving a larger surface area for the reactions to occur and producing a continuous flow of silicon granules with no need for further cleaning.

The company says once it ramps up production from its current pilot projects it will be able to give long-term supply guarantees to the solar industry at around $32 a kilogram.

Wacker believes solar-cell makers would tolerate this price for the quality it says it can provide, and the EPIA's Viaut cautiously agrees that the price is in a realistic range.

He would certainly welcome any help for an industry still in its formative years.

"It's a very sensitive and still a very young sector," Viaut said. "Any little thing can make a huge difference to us."

(Additional reporting by Lucas van Grinsven in Amsterdam)