The biggest name in solar energy these days is Saddam Hussein.

The instability that the Iraqi leader's invasion of Kuwait brings to the world oil market is exactly what the tiny solar energy industry needs. The more oil costs, the better solar looks, especially at the corners of America's energy sector, where the solar industry hopes to play a more significant role in the 1990s.

In the past decade, solar energy and other renewable energy sources largely faded from public view. But during the same period, there has been a surge in the efficiency of renewables, in particular the almost magical photovoltaic cells that translate photons from sunlight directly into electricity. Even skeptics say it is no longer a question of whether the technology works. It is a question of what it costs. Despite a steady reduction in cost, solar still costs plenty.

For example, if the average American household were to abandon fossil fuels and convert completely to photovoltaics, the price would be between $50,000 and $70,000. That would buy a rooftop of solar cells and all the converters, wiring and batteries needed. A simpler kit, which would run some lights and a television set, runs about $500 and is popular in rural parts of the Third World, which is presently solar energy's biggest market.

A Question of Government Policy

No one, not even solar power's biggest boosters, contends that photovoltaic cells are going to replace fossil fuels anytime soon. But according to recent projections prepared for the Energy Department, renewables could satisfy more than one-quarter of America's energy needs by the year 2030. And in the mix of renewable energy sources, which include wind, hydroelectric power and the burning of trees and waste, photovoltaics remain one of the most promising and elegant technologies.

"I think we'll get there, but it isn't clear whether we get there fast or get there slow. It's all going to depend on government policy," said John Johansen of Photon Energy Inc., a small photovoltaic producer based in San Diego. "Progress in photovoltaics has been excellent. There's been a much faster learning curve than in other technologies. Cost has plummeted. Efficiency is up. But cost is still the key."

In essence, a photovoltaic cell is just a sandwich made of semiconducting materials such as silicon. The cell absorbs the energy of an incoming photon of light and uses the photon's energy to knock around electrons, which move from spot to spot and so create electrical current.

During the 1980s, solar researchers and manufacturers have quietly chipped away at the price tag of photovoltaic devices. While the workhorses of the industry remain photovoltaics made from silicon, researchers have come up with a host of more exotic and more efficient materials. In 10 years, the cost of generating electricity with solar cells has fallen from about $1.50 per kilowatt-hour to around 30 cents today. A kilowatt-hour is a standard unit for pricing energy and is the amount of electricity needed to light ten 100-watt light bulbs for an hour.

The price must drop much more if photovoltaics are to find wider uses. The cost of generating electricity today from traditional sources such as coal and gas is between 6 and 10 cents a kilowatt-hour. The cheapest electricity is generated by coal, which the United States possesses in great abundance. Indeed, according to Energy Department projections, by 2030 the United States will need to import 80 percent of its oil but will still get most of its electricity from coal, its dirtiest source and one that pumps carbon dioxide, a climate-warming gas, into the atmosphere.

Helping Utilities Meet Top Demand

Photovoltaic enthusiasts maintain that the first large-scale use of their devices may be to help utility companies deal with demand during peak periods of use, such as summer afternoons, when air conditioners are straining the capacity of the utility grid.

The concept, called "peak shaving," works like this: A utility company continues to generate most of its electricity from coal, but during peak use, it takes the extra energy it needs from photovoltaics. This concept makes sense, say proponents, because the cost of peak power is greater. During peak periods, utilities often must turn on turbines that run on natural gas or light oil, which can cost about 15 cents a kilowatt-hour. The solar industry promises it can produce electricity for about 15 cents a kilowatt-hour by the mid-1990s.

Such widespread application would be a far cry from today's Lilliputian photovoltaic industry, which is valued at about $500 million worldwide. Last year, the total world output by photovoltaics was a modest 45 megawatts, or enough power to supply about 15,000 homes. Most photovoltaics are still used in wristwatches and pocket calculators, or to power electric fences, water pumps, highway signs or lonely cabins.

Despite technological gains, manufacturers and researchers say rapid growth in the solar industry will depend largely on the support of the federal government for research and development.

To date, the government has been a fickle patron, first showering the industry with money under the Carter administration, then starving it during the Reagan years.

"The uneven support hurt us," said David Carlson of Solarex Corp., the largest U.S. producer. "The whole research enterprise suffered."

"We were hanging on by our fingernails during the 1980s. A lot of people thought we'd disappeared," said Duane Sunderman, director of the Energy Department's Solar Energy Research Institute in Golden, Colo.

In the 1980s, the solar industry went overseas as U.S. oil companies abandoned their research efforts. The largest U.S. producer, Arco Solar, was sold to the German company Siemens this year. With the exception of Amoco's Solarex Corp., most U.S. solar companies employ only about a dozen people.

"I think there has to be more government action. More incubation. More encouragement," Sunderman said. "Letting it happen on its own isn't a good idea."

2 Routes: Economy and Efficiency

Experts say the future of photovoltaics most likely lies along two routes. Researchers in industry and at the Solar Energy Research Institute believe the technology will evolve away from the current generation of photovoltaic cells made of silicon crystals, which is the same material used to make computer chips. Unlike computer chips, which have become vanishingly small, silicon photovoltaics are bulky and relatively expensive.

One future route will be the manufacture of thin-film photovoltaics, in which the photoactive material will be sprayed onto a cheap substrate, almost like tinted glass. These cells probably will not be very efficient, but they probably will be cheap.

The other route is more high-tech. Researchers are working on a new generation of cells in which the photovoltaics are stacked one atop the other, producing cells that can capture almost 30 percent of the sun's energy and convert it to electricity. Since these cells would be expensive, they would be surrounded by concentrators that would capture light and focus a beam hundreds of times more powerful than sunlight on the photovoltaics. In such a scheme, the high cost of the photovoltaic cell is overcome by the increased power yield.

How the industry sorts itself out will become more apparent during the 1990s. "I just finished a book on the subject, and though I think my projections are correct, you could easily have written a book with three different endings," said Ken Zweibel of the Solar Energy Research Institute. "The story is still unfolding."