High profile silicon photovoltaic solar manufacturer SunPower (NASDAQ: SPWR [1]) announced today that the company has achieved a 22-percent efficiency rating with newly-announced second generation solar photovoltaic cells.

Great timing, considering that this week is Solar Power 2006, the industry's biggest North American confab, in San Jose. And also convenient that SunPower’s latest quarterly earnings call falls later this week, too.

But wait – also today, rival solar cell maker Kyocera Solar (NYSE: KYO [2]) announced it had achieved a new world for solar cell energy conversion efficiency. Its efficiency factor: 18.5-percent.

What gives? Isn’t 22-percent greater than 18.5?

Not quite. “Kyocera makes less-efficient multicrystalline solar cells,” explained Oliver Koehler of SunPower. “Our cells are monocrystalline. Still, they’re getting good performance for a multicrystalline cell,” he admitted.

Koehler is product manager for SunPower’s new SPR-315 solar panel. Using the company’s new second generation moncrystalline cells, the panel achieves a theoretic rating of 315 watts. The company claims that’s the highest power rating available from a single panel from any manufacturer.

SunPower’s new panel incorporates 96 of the company’s Gen 2 solar cells. Panel efficiency is improved by a combination of enhanced cell architecture and improved packing density. Compared with conventional solar panels, the new SPR-315 allows customers to generate up to 50 percent more power per square foot of roof area with half as many panels.

So why is there still a market for multicrystalline cell-based panels?

“It’s simple: multicrystalline is cheaper,” said Tom Dyer, vice president of marketing for Kyocera Solar. “SunPower’s cells are higher power, yes, but cost-per-kilowatt is the real issue. How much power can you generate for the minimum amount of money is customers’ real concern.”

Kyocera Solar VP marketing Tom Dyer – looking like a world record holder. >> [3]

Back in 1985, Kyocera became the first manufacturer to commercialize multicrystalline silicon cell technology. Prior records for energy conversion efficiency in multicrystalline cells of this size were also set by Kyocera, including 14.5% in 1989, 17.1% in 1996, and 17.7% in 2004. This latest improvement is the result of increasing the amount of light intercepted by the cell by moving the front contacts to the back of the cell, something SunPower’s Koehler claimed his company did some time ago.

Do lower-priced multicrystalline products indeed provide lower cost-per-kilowatt than higher efficiency monocrystalline cells? When asked, Kyocera’s Dyer declined to provide any specific economic analysis.

Another key point solar panel customers need to ask their vendors, according to Evergreen Solar (Nasdaq: ESLR [4]) product manager Ian Gregory, is the relationship between a panel’s theoretical rating and its real-world performance.

“Ask yourself: ‘what am I really buying? Is my panel performing less than what I think I actually bought?’” asked Gregory.

Evergreen Solar is another leading cell and panel manufacturer, and something of a poster child as the largest venture-backed solar IPO to date. It claims to have the lowest variation tolerances - and therefore the highest performance predictability - in the industry. It claims its panels perform between -2-percent and +4-percent of their rated value.

And they indeed appear to have leadership in predictability. According to their published documents, competitor SunPower acknowledges a peak power tolerance of + or - 8-percent with their products, while Kyocera acknowledges -5-percent to +10-percent.

Evergreen wasn’t silent, itself, this day of announcements at Solar Power 2006. It used the opportunity to talk up a new four-year $100M sale [5].

All this said, the efficiency debate is an interesting but somewhat false distinction. All leading solar panel manufacturers have months of backlogged orders and are expanding plant capacity as fast as they can. Worldwide demand continues to exceed manufacturers’ ability to produce enough photovoltaic panels. And if the industry pundits at Solar Power 2006 this week are to be believed, it will continue to be so for some time.

Which is good news for these manufacturers, and other leading makers of photovoltaic panels.