Updated on February 11, 2008.

IN ADDITION TO the wind turbines, a rainwater retention pond and special ventilation systems dotting the landscape at Wal-Mart's "experimental" superstore in McKinney, Tex, solar panels glimmer atop the garden center, garage and entrance areas. The panels, which were first installed in 2005, now generate enough solar energy to power 2,162 homes a day and have cut the store's greenhouse gas emissions by 37,750 pounds a year.

The experiment in McKinney has gone so well that Wal-Mart launched a pilot project that will see to the installation of sun-harnessing technologies in 22 of its stores throughout California and Hawaii. Solar, the company claims, will be able to provide 30% of each store's power as soon as the systems are installed.

With endorsements like Wal-Mart's, as well as dozens of other mega-corporations across the globe, it appears solar power is no longer a utopian pipe dream that's solely the provenance of do-gooders. In fact, both Corporate America and Wall Street have become sun worshippers. Companies such as oil giant BP and General Electric have broken into the business of selling solar photovoltaics, or PVs, which capture and convert radiant sunlight into electricity. On Wall Street, the reception of a slew of solar IPOs has not simply been warm, but downright hot. First Solar, for example, went public at $20 a share last November and now trades at $173.19 a 767% increase. It's now trading at 83.26 times forward earnings.

It's hard to dispute the fundamentals of the solar business: There's an unending supply of sunshine (at least for the next several billion years), potential customers the government, businesses and consumers are looking for ways to lessen their dependence on overextended electric grids, pricey oil, and other fossil fuels, and there's the added bonus of great PR that comes with joining the fight against global warming.

Clean Edge, a research and consulting firm that advises companies on how to make profits from "clean" technologies, estimates that revenue from the installation and purchase of solar PVs will grow into a $69.3 billion market by 2016 a 344% increase from the $15.6 billion the industry pulled in last year.

The growth rate is staggering, but there's one caveat: Those estimates, says Clean Edge co-founder Ron Pernick, will only fly if the cost to install solar PV systems comes down significantly. As it stands now, solar is prohibitively pricey. Consumers shell out an average $30,000 to $40,000 to retrofit their homes with a four-kilowatt solar system. And while Pernick notes that prices for solar PVs have dropped significantly in the past 30 years, they will have to drop by a lot more before we start seeing much wider adoption of the technology. In order to reach a goal of price parity with electric rates of about $2 to $3 a peak watt installed, Pernick estimates that prices for solar PV systems will need to be cut in half.

That's no small feat for an industry haunted by a shortage in its main ingredient, polysilicon, a highly refined form of silicon used in solar panels and computer chips. Due to its complexity and cost, polysilicon is produced by only a handful of manufacturers. As demand continues to grow, these manufacturers have become increasingly overextended, thus pushing prices ever higher. Therein lies the sticky wicket for solar power: How to make the technology affordable enough that it can be adopted on a massive scale? The solution is twofold. First, there needs to be the establishment and/or extension of federal and state tax incentives and credits. Secondly, we must await the widespread commercial launch of cheaper, more accessible solar technologies that will be less reliant on polysilicon.

The federal government currently gives homeowners a tax credit for 30% of the costs associated with installing a solar system that maxes out at $2,000. (For businesses, there's no cap). In the eyes of Noah Kaye, the director of public affairs for trade association Solar Energies Industries Association (SEIA), the move is a step in the right direction, but it's far from enough. One of the biggest issues, he says, is that the credit, which was initially established in 2005, expires at the end of next year. That gives people looking to go solar a very limited time horizon in which to plan, or raise the money for, their projects.

"To stimulate the long-term use and manufacture of solar energy, we need long-term plans spanning eight to 10 years," says Kaye. We may be moving closer to that goal.

In August 2007, the House of Representatives voted in favor of extending the investment tax credit for commercial solar installations until 2016 and removing the $2,000 cap on residential projects. Now, the fate of the credits rests in the hands of the Senate.

Kaye argues that the limited tax credits are one of the reasons why the U.S. once at the forefront of solar power has fallen behind countries like Japan and Germany where incentives are much more generous. Germany, for example, has an incentive program in place that pays those who install solar systems a fixed rate for a period of 20 years. Compared with these nations, the U.S. has been decidedly slow in incentivizing the public to adopt alternative energies.

Prospects are much brighter on the state level, especially in California. As part of Governor Arnold Schwarzenegger's Million Solar Roofs program, California has allotted $3.3 billion toward funding solar electricity (PV systems) in homes, as well as commercial and industrial projects over the next 11 years. Those who install solar technologies receive either a monthly payment based on the amount of energy the system produces (if it's a large 100-kilowatt system) or a one-time upfront payment based on expected system performance (for systems under 100 kW). Other states making big solar pushes include New Jersey and Maryland. (For a list of state incentives, click on the Database of State Incentives for Renewables & Efficiency's web site.

But tax incentives are just part of the battle. Companies like privately held Nanosolar in Palo Alto, Calif., are looking for solutions on the technology front. Nanosolar has developed a so-called "thin-film" technology that would lessen the industry's dependence on polysilicon. The company has developed tiny solar cells with a material called copper indium gallium selenide, or CIGS, that can be sprayed onto various surfaces like glass or plastic. So instead of installing conspicuous solar panels on your roof, windows coated with CIGS could be generating the power running your laptop. Founded four years ago, Nanosolar has already raised more than $100 million from investors and, last spring, landed a $20 million project from the Department of Energy.

However, the thin-film technology still needs some work. Until the kinks are worked out and manufacturing of CIGS-based technology is up to speed, companies like SunPower, which makes the polysilicon-based solar panels, will continue to be one of the pure-play rulers of the solar market. SunPower's approach is to improve the efficiency of its solar panels so that they can convert a larger percentage of sunlight into electricity and therefore be more cost-effective.

"With all of the venture money coming in and corporate money being extended, we can bet that one of those technologies is going to have traction," says Clean Edge's Pernick.

Betting which technology will win may be moot at this point. The solar stocks trading on Wall Street are priced more on promise than profits. Long-term investors and solar believers alike may want to consider holding tight to see what comes to light in the years ahead.