Sep. 1--DuPont Co.'s announcement last week that it would spend $50 million to build a factory to make solar-panel components is a sign of boom times in the solar-energy industry.

Much of the demand for solar cells is driven by government incentive programs -- including one in New Jersey -- that aim to reduce greenhouse-gas emissions from power plants that burn fossil fuels.

These programs have pushed global sales of photovoltaic solar panels -- which are still considered prohibitively expensive without subsidies -- to $15 billion in 2005, continuing a five-year trend of more than 30 percent annual growth, according to the Solar Energy Industries Association in Washington.

The surge in demand has strained supplies of silicon, which is the indispensable material in 94 percent of the photovoltaic modules being manufactured today. Silicon is also used in the electronics industry, which is notorious for boom-and-bust cycles. That experience has made silicon manufacturers cautious about expanding to meet solar-panel demand.

Costs have risen because of this shortage. "My prices for panels have gone up 5 to 10 percent" this year, said Charles Reichner, owner of the Heat Shed Inc., a solar-system installer based in Bucks County.

Nevertheless, the long-term trend is toward lower prices. The price of solar modules has declined from $27 per watt of peak production capacity in 1982 to $5.45 at retail now, according to Solarbuzz L.L.C., a consulting firm that surveys manufacturers for its reports.

The key to further reducing prices is the expansion of silicon- refining capacity, experts said.

"We've increased the demand. We want the manufacturers to increase the supply," said Michael Winka, director of New Jersey's Office of Clean Energy.

But it takes years to get a new silicon plant running, which means prices are not going down soon. "The manufacturers are telling us somewhere around 2008," said Rick Holmes, vice president of business operations at Mesa Environmental Sciences Inc. in Malvern. "It will take that long to get the raw silicon plants running... . In the meantime, our phone rings off the hook."

Suppliers of other materials for the solar industry are also expanding.

DuPont said it was spending more than $100 million to expand its businesses that supply the solar industry. That includes the announcement last week that it would build a $50 million factory in North Carolina to increase production of Tedlar film, which is used on the backs of solar panels.

DuPont officials would not disclose the company's total sales to the solar industry, but they said they were keeping pace with the industry's growth rate of more than 30 percent. "We've grown up with this industry," said Cynthia C. Green, vice president and general manager of DuPont's fluoroproducts division.

The Solar Energy Industries Association said the cost of solar electricity came down 18 percent every time manufacturing output doubled.

Angiolo Laviziano, president of Renewable Energy Concepts Inc., known as REC Solar, a system designer and installer in San Luis Obispo, Calif., said the industry could outgrow the need for subsidies in 10 years. For that to happen, he said, the cost per watt for systems -- including installation -- must fall to $3.50 to $4 from $8 to $9 now.

But for now, few homeowners or business owners would be likely to spend money on expensive solar-power systems without government support, such as the program adopted in California this month calling for the installation of one million solar roofs by 2018, experts said.

"If they didn't get rebates like they do in New Jersey or California, it would take 20 years for them to see a return on their investment, said Reichner, the Bucks County solar-systems company owner. "With the rebates, it's less than 10 years."

Starting practically from scratch five years ago, New Jersey now has 1,668 solar-power systems with the capacity to provide electricity for 3,137 homes.

A state rebate program that has paid or agreed to pay $173.8 million in subsidies has propelled the Garden State boom in the use of photovoltaic cells.

"We're very happy with it. It's more popular than we expected," Jeanne Fox, president of the New Jersey Board of Public Utilities, said in an interview this week.

Current solar capacity in New Jersey is 21.7 megawatts, an additional 22.5 megawatts have been approved, and projects that would add 37 megawatts of power are awaiting approval, putting the state close to its goal of 90 megawatts by 2008.

"We're going to more than meet that number," Winka said. The state's goal is to have 1,500 megawatts of solar power online by 2020.

But in New Jersey, it is not just the rebate that makes solar financially feasible.

Owners of solar-power systems receive a certificate for each 1,000 kilowatts of electricity their system generates. Utilities buy them to meet renewable-energy requirements. This year, they have been selling for about $200.

In Chester County, Michael Bullard's solar-power system was subsidized by a $25,000 grant from the Sustainable Business Fund.

Bullard sells the electricity his photovoltaic system generates to the Energy Cooperative of Philadelphia for 28 cents per kilowatt- hour, and buys renewable electricity back from the cooperative for 14.9 cents per kilowatt-hour.

"We get checks in the mail all year for our electric bill," Bullard said.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.