The Korean company Hanwha SolarOne has shown the first commercial-sized solar panel to use a novel technology for producing silicon wafers, which are the most expensive part of a solar cell. Developed by the Santa Clara, California-based startup Crystal Solar, the technology makes wafers that are less than a third the thickness of conventional wafers. It wastes less silicon during processing than conventional approaches and greatly reduces the amount of equipment needed to make the wafers, potentially cutting wafer costs in half. Wafers account for a third to a half of the cost of making a solar panel. Hanwha has taken a $15 million stake in Crystal and is helping to bring the technology to market.

The new technology and the partnership between Hanwha and Crystal Solar could be a model for how to continue to cut the cost of conventional silicon solar cells. A few years ago, the prospect of solar panels that cost less than $1 per watt to make seemed far-fetched, a view that led investors to pour money into alternatives to silicon solar panels, such as thin-film solar panels.

But now solar panels do cost under $1 per watt to make, which has driven many thin-film startups out of business. Instead of developing a technology to challenge silicon solar panels, Crystal is developing a technology that can easily be incorporated into existing silicon panel manufacturing. And rather than manufacturing solar panels itself, it’s working with a company in Hanwha that already has manufacturing experience. Startups typically lack manufacturing experience, and many fail because they can’t bring manufacturing costs down.

The normal way to make silicon wafers—the main component of a conventional solar cell—involves making highly purified silicon (called polysilicon), melting it down, and carefully cooling it to produce blocks of crystalline silicon. Those blocks are then sawed to make wafers, a process that requires large, expensive equipment, and one that wastes about half of the expensive purified silicon it starts with.

An early stage of conventional processing derives pure silicon from a gas that contains silicon and other elements. Crystal Solar developed a way to create thin crystalline silicon wafers directly from that gas, eliminating the need to first make polysilicon, melt it down, crystallize it, and saw it. It’s a version of a process used in the chip industry, but it’s far more efficient and faster (see “Silicon Solar Cells Ditch the Wafers”).

The approach reduces costs, not only by reducing silicon waste, but also by eliminating much of the expensive equipment needed to make wafers, says Chris Eberspacher, the chief technology officer of Hanwha SolarOne. Eberspacher says that for Hanwha to develop similar technology itself would be risky and take years of development. It decided instead to look to startups for innovation. “This way, we don’t have to pick one technology,” he says. “We can survey the range of what startups are doing and pick the best. It allows us to move much faster.”

Eberspacher says that Crystal Solar is still working to bring down costs, such as by reducing the cost of its machines for making the wafers and increasing the number of wafers they can produce. He says if Crystal Solar continues to hit its milestones, Hanwha could offer a commercial product that uses the technology in 2014.