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It was a timely protest. Europe was reeling from a wave of petrol protests that hammered home the extent of fossil-fuel dependence. Just before that, it was reported that a mile-long lake had appeared at the North Pole, providing terrifying evidence of global warming.

Where is solar power when we need it? Greenpeace believes that up to 85% of the UK's energy needs could be provided by mounting photovoltaics on buildings. Yet despite its massive potential, the technology has so far failed to make any significant impact. There is a simple reason: solar electricity costs around five times as much as electricity from the grid.

Well-intentioned architects wanting to use solar panels have found the price prohibitive. "We wanted to mount PVs on the capsules of the London Eye," says architect Julia Barfield, "but the technology isn't there and it was too expensive."

Likewise, the team behind the BedZED zero-emissions development in Sutton, south London, scrapped photovoltaics in favour of a combined heat and power plant. The QS had calculated that it would take 73 years for the panels to pay for themselves.

So a technology that could help save the world is caught in a catch-22 situation: photovoltaic manufacturers say they cannot bring down prices unless demand rises, but demand is not rising because of the cost.

"We know this is a pretty easy cycle to break," says Rob Gueterbock, Greenpeace climate and energy campaigner. "What solar needs is a kick-start from government or industry to break the catch-22, create a mass market and bring the prices down."

The kick is unlikely to come from the UK government, which is unconvinced about photovoltaic panels' immediate usefulness. "We don't see that solar will be making a significant contribution within the next 10 years, although it will in the long term," says a spokesman for the Department of Trade and Industry. "Given that we have indigenous supplies of oil and gas, we believe it is far better to focus on technology to make PVs more productive for people to use."

The DTI is about to fund a £1m research and development project to build 100 solar-powered homes. This looks feeble compared with other countries. Germany, for example, is building 100 000 solar roofs and paying a premium for solar electricity to help the industry get going.

The UK's only volume photovoltaic manufacturer, Shell Renewables, moved to The Netherlands earlier this year citing lack of government interest. But this is not the only obstacle hindering the industry in the UK. Most electricity companies view photovoltaics as a nuisance. Few have the technology in place to buy solar power from small-scale providers and, even when they do, selling power to the grid is a loss-making venture.

As a result, uptake of photovoltaics lags far behind other countries: the UK has 2.2 MW of panels, compared with 66 MW in Germany, 147 MW in the USA and 190 MW in Japan.

Ironically, the organisation doing most of the pushing is oil multinational BP. Earlier this year the company rebranded itself as Beyond Petroleum and announced that its future lay in renewable energy. The move was denounced as a ploy by Greenpeace, which pointed out that the company had spent more on its new image than it had invested in solar power. Nevertheless BP Solar, the company's photovoltaics division, intends to treble its output and expects turnover to increase fivefold to $1bn within five years.

Just around the corner?

Ray Noble of BP Solar firmly believes solar's time has come. A lifelong champion of solar power, he quit his job as an associate director at Arup two years ago and joined BP, believing that the industry was about to take off.

"The scientists have been saying for years that one day solar power will be able to do this, that and the other, but they never said when that would be," says Noble. "But we saw the graph going vertical at the end of last year."

What solar needs is a kick-start to break the catch-22, create a mass market and bring the prices down

Rob Gueterbock, Greenpeace

Noble expects prices to plummet and efficiency to increase over the next five years as increased competition, demand and technological advances drive the industry forward. New thin-film technology – which deposits a 1.5-micron-thick coating of photovoltaic material on glass – means photovoltaics can be part of the building. "If you consider it as a building material, the payback is much shorter – around 20 years," says Noble. Although thin-film photovoltaic costs half as much as monocrystalline panels, it is still expensive: £160 will buy a square metre, which will provide enough energy to power a light bulb.

Until costs fall further, BP plans to introduce the public to photovoltaics by integrating them into its petrol stations. It is opening the first of its solar-powered canopies next month at Finchley and Hammersmith in London.

It is also attempting to get its products showcased on high-profile buildings. "We've been targeting the big UK architects – the Fosters and the Rogers – because they tend to lead the world," says Noble. "They're saying [thin-film photovoltaic] is very similar in cost to the ceramic-etched glass they're using."

Sure enough, Foster and HOK+Lobb's Wembley Stadium is set to host the UK's largest ever solar array: the entire south facade will be clad in thin-film photovoltaics. However, even such a large array will contribute only a small fraction of the stadium's energy needs.

But Wembley's solar wall is dependent on the European Commission providing 35% of the cost as a grant from its Energy, Environment and Sustainable Development programme. Without this, it is unlikely to go ahead.

The 73-year problem

Grants and "creative accounting" are essential to make photovoltaic add up, according to Whitby Bird & Partners' Shane Slater, who is developing a

£1m solar array for a mixed-use scheme in London. Arup associate director Chris Twinn agrees. Speaking at a solar conference organised by the Chartered Institution of ºÚ¶´ÉçÇø Services Engineers last week, he said: "You're beginning to move from engineering to financial manipulation to get buildings off the ground."

The point is illustrated by Twinn's experience on the BedZED scheme. After the designers had scrapped the idea of supplying homes with solar electricity, it occurred to them that there was an alternative use for their photovoltaics.

The panels will now be used to recharge the development's fleet of electric cars – a move made possible by the high price of UK petrol.

Instead of the 73-year payback period, photovoltaics used to power cars will pay for themselves in 13 years. And, with an EU grant providing about half the cost, this comes down to a viable six-and-a-half years. "You can get more money selling your electricity to a car user than selling it to the grid," says Twinn. "That is a function of the level of tax on petrol."

Innovative London housing association the Peabody Trust is adopting a different approach to the solar problem. It has commissioned an audit to see whether it could single-handedly kick-start the UK photovoltaic industry by replacing all 17 000 roofs in its portfolio with photovoltaics. The trust wants to protect its tenants from rising energy costs in future and, it reasons, many of the roofs would have to be replaced anyway.

"The question is, how much could we drive down the cost [of photovoltaics] if we buy enough?" says the trust's development director Dickon Robinson. But without government help, Robinson does not yet know if the idea is viable.

The one glimmer of hope for the UK solar industry is the government's self-imposed target of deriving 10% of energy from renewable sources by 2010. But it seems the government, stung by last month's petrol crisis, is backpedalling furiously on this commitment.