The solar cell industry will grow by $7bn a year up to 2010, at which point it will be receiving as much funding each year as the semiconductor sector.

That is the conclusion of a new report from US technology research firm iSuppli, which said that booming demand for solar energy would fuel a 40 per cent annual increase in the size of the photovoltaic (PV) cell industry – to almost $30bn within two years.

PV, which involves the creation of electricity using sunlight-absorbing cells, has already been growing at a rate of 25 per cent a year and is worth around $15bn (£30bn) a year, according Deutsche Bank.

"Nearly all market participants plan to increase their sales by a compound annual growth rate of 40 to 50 per cent during the next few years," said Dr. Henning Wicht, senior director and principal analyst at iSuppli.

He added that the rapid growth was being driven by surging oil costs, as well as rising demand for energy as a result of population growth. "Projections show the world will need three to four times more electrical power over the next 50 years to support continued growth in population and economic output," the report stated.

Wicht said that for the growth to be sustained the industry would need to receive investment inflows of at least $500m to fund the increased manufacturing capacity.

The iSuppli report follows a paper by RNCOS earlier this month, which forecast that PV cells would power two billion homes by 2025 and account for 10 per cent of the world's power by 2035.

The paper also claimed that by 2020, about 50,000 megawatts worth of PV systems would be installed annually, up by a factor of nearly 20 times from 2007 levels.