Solar power will prove as cost effective as electricity from coal-fired power stations within three years, according to a new report from US environmental think tank the Earth Policy Institute.

Released last week, the study predicts that advancements in thin film photovoltaic (PV) cells that can be manufactured using cost-effective printing processes will ensure that production costs reach $1 per watt by 2010, making solar PV competitive with coal-fired electricity.

The report echoes predictions from US solar start up Nanosolar, which last month began shipping printed thin-film solar cells, which it claimed could soon be sold profitably for as little as $0.99 per watt.

The Earth Policy Institute also predicted that traditional silicon-based PV cells would become more cost effective over the next three years as raw material shortages are addressed and production facilities are scaled up.

"The average price for a PV module, excluding installation and other system costs, has dropped from almost $100 per watt in 1975 to less than $4 per watt at the end of 2006," the report noted. "With expanding polysilicon supplies, average PV prices are projected to drop to $2 per watt in 2010."

The study also concluded that PV solar panels are now the world's fastest growing energy source with worldwide production having increased by 50 per cent during 2007 to 3,800MW. It added that global PV cell production to date amounts to about 12,400MW - or enough to power 2.4m US homes.