The most important issue with solar panels is capital cost (installation and materials). Newer alternatives to standard crystalline silicon modules including casting wafers instead of sawing, thin film (CdTe, CIGS, amorphous Si, microcrystalline Si), concentrator modules, 'Sliver' cells, and continuous printing processes. Due to economies of scale solar panels get less costly as people use and buy more — as manufacturers increase production to meet demand, the cost and price is expected to drop in the years to come. By early 2006, the average cost per installed watt for a residential sized system was about USD 7.50 to USD 9.50, including panels, inverters, mounts, and electrical items.

In 2006 investors began offering free solar panel installation in return for a 25 year contract, or Power Purchase Agreement, to purchase electricity at a fixed price, normally set at or below current electric rates.It is expected that by 2009 over 90% of commercial photovoltaics installed in the United States will be installed using a power purchase agreement. The current market leader in solar panel efficiency (measured by energy conversion ratio) is SunPower, a San Jose based company. Sunpower's cells have a conversion ratio of 23.4%, well above the market average of 12-18%.However, advances past this efficiency mark are being innovated by engineers at MIT and the California Institute of Technology, and efficiencies of 42% have been achieved at the University of Delaware.

World solar photovoltaic (PV) market installations reached a record high of 2.8 gigawatts peak (GWp) in 2007. The three leading countries (Germany, Japan and the USA) represent nearly 89% of the total worldwide PV installed capacity. On Wed 1 August 2007, word was published of construction of a production facility in China, which is projected to be one of the largest wafer factories in the world, with a peak capacity of around 1,500MW.

Germany was the fastest growing major PV market in the world during 2006 and 2007. In 2007, over 1.3 GWp of PV was installed. The German PV industry generates over 10,000 jobs in production, distribution and installation. By the end of 2006, nearly 88% of all solar PV installations in the EU were in grid-tied applications in Germany. The balance is off-grid (or stand alone) systems. Photovoltaic power capacity is measured as maximum power output under standardized test conditions (STC) in "Wp" (Watts peak).

The actual power output at a particular point in time may be less than or greater than this standardized, or "rated," value, depending on geographical location, time of day, weather conditions, and other factors. Solar photovoltaic array capacity factors are typically under 25%, which is lower than many other industrial sources of electricity. Therefore the 2006 installed base peak output would have provided an average output of 1.2 GW (assuming 20% × 5,862 MWp). This represented 0.06 percent of global demand at the time. Building-integrated photovoltaics (BIPV) are increasingly incorporated into new domestic and industrial buildings as a principal or ancillary source of electrical power,and are one of the fastest growing segments of the photovoltaic industry.

Typically, an array is incorporated into the roof or walls of a building, and roof tiles with integrated PV cells can now be purchased. Arrays can also be retrofitted into existing buildings; in this case they are usually fitted on top of the existing roof structure. Alternatively, an array can be located separately from the building but connected by cable to supply power for the building.

Where a building is at a considerable distance from the public electricity supply (or grid) - in remote or mountainous areas – PV may be the preferred possibility for generating electricity, or PV may be used together with wind, diesel generators and/or hydroelectric power. In such off-grid circumstances batteries are usually used to store the electric power.

In locations near the grid, however, feeding the grid using PV panels is more practical, and leads to optimum use of the investment in the photovoltaic system. This requires both regulatory and commercial preparation, including net-metering and feed-in agreements. To provide for possible power failure, some grid tied systems are set up to allow local use disconnected from the grid. Most photovoltaics are grid connected. In the event the grid fails, the local system must not feed the grid to prevent the possible creation of dangerous islanding.