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The first generation of solar power technology put the resource on the map. However, if solar energy is to have a future, it needs another leap forward to bring its cost down and its efficiency up. Good news though ” the industry knows where it needs to go next. The great news for investors is that publicly-traded companies are largely going to be the organizations that get us there. Theres the opportunity.

Here are some of solar powers most compelling current developments, and a few companies ” some of them smallcaps - that could make their investors glad to be owners.

Paint On Solar Panels

Traditional photovoltaic solar cells are big, fragile, and theyre heavy enough to make them difficult to mount just anywhere. And, they can only be attached or mounted to a large flat surface. That limits their use. To get around this challenge, solar panel paint is being developed. Like any paint, this specialized paint can be installed anywhere, regardless of the underlying shape of the structure being painted.

Though no publicly-traded stock can be purchased as a way of investing in this paint, dont assume thats a permanent problem. When corporations see that the technology is viable, theyll likely adopt and begin marketing it.

Paper-Thin Solar Panels Make Like Much Easier

Somewhere between paint-on solar panels and the typical photovoltaic solar panel, youll find what are called thin film solar panels. Theyre paper thin, light, and flexible. As such, theyre usually easier to mount than most other panels. These can even be rolled into ribbon strands, for even greater functionality.

First Solar Inc. (NASDAQ: FSLR) is one of the companies leading the thin-film effort. The companys cadmium telluride panels cost less than $1.00 per watt to make, which is approaching comparability with photovoltaic cells.

Bigger may not necessarily be better though. Smallcap company XsunX, Inc. (OTCBB: XSNX) believes that its ASI-120 (amorphous silicon) solar module can provide an even lower cost per watt while supplying electricity in a wider variety of geographical environments. The companys thin-film modules find a balance between the common silicon wafer modules, which are more costly, and lower rated power thin film modules, which are fairly ineffective.

Another entry into the thin-film arena is Uni-Solar Ovonics triple junction thin film solar cell, which is quickly proving to be very cost effective. The company is wholly-owned by smallcap company Energy Conversion Devices (NASDAQ: ENER), for interested investors.

Better Solar Power Storage

You dont need to be solar power physicist to figure out the sun doesnt shine 24 hours per day. After sunset, the industry needs to figure out a way to keep the electricity flowing. The obvious solution is storing the power created during the day for use at times when there is no sunlight. How? A battery.

The challenge in storing utility-levels of electricity is simply that current batteries cant do the job well enough. Most modern batteries are still made of solid components which degrade over time, take a long time to charge, and they dont last all that long. The solution may be a newly-developed, liquid-based battery.

The good news is, its the finest minds at MIT working on the liquid battery. The bad news is, you cant invest in MIT. Thats ok though. Once MIT proves their liquid battery is better, for-profit companies will become interested.

Until that happens, theres a company called Valence Technology Inc. (NASDAQ:VLNC) that may have the best-best solution. Valence manufactures next-generation batteries for automotive, industrial, and even utility power purposes. These could work well when it comes time to store solar ” or wind ” electricity. Investors looking specifically for a smallcap stock in the battery world may want to look at like EnerSys (NYSE: ENS) and Advanced Battery Technologies Inc. (NASDAQ: ABAT). Both are currently profitable and competitive.

That said, there are at least a couple of dozen battery companies that could actually meet the needs created by the continued growth of solar power. Some are better than others, but thats not a function of size.

Better Backsheets

Its a little ironic that solar power was largely designed to be an alternative to the use of petroleum, yet petroleum is used to manufacture solar panels. Where? Not the solar collection cells themselves ” those are made of silicon. However, these cells are covered by a protective coating called a backsheet, most of which use petroleum in their design.

Of course, this means the cost to build backsheets can vary with the price of oil ” volatility that most technology companies just cant tolerate. To avoid that kind of price volatility in addition to improving the quality of backsheets, a small company called BioSolar Inc. (OTCBB: BSRC) has designed an effective solution. Rather than use petroleum in backsheets, use a plant material to make what are effectively bio-based backsheets.

BioSolar had been primarily focused on backsheet technology for the most common crystalline silicon (C-Si) photovoltaic solar cells the markets biggest seller as of right now. However, copper-indium-gallium-selenide (CIGS) and cadmium telluride (CdTe) thin-film panels are quickly becoming competitors of C-Si panels because of their similarly-low costs and impressive power production. So, BioSolar has recently begun work on bio-backsheets for CIGS and CdTe thin panels as well.

Windows Not Just For Looking Through Anymore

A lack of transparency clearly limits where and how photovoltaic panels can be used, since a window blocked by a solar panel isnt a window at all. However, not utilizing the surface area of windows ” particularly for large, glass-covered buildings ” is a waste of potential energy. The solution is a see-through solar panel.

Turning glass into an effective solar panel without sacrificing transparency isnt science fiction for New Energy Technologies, Inc. (OTCBB: NENE). This small company has devised a way to coat windows with silicon nanoparticles that actually convert ultraviolet light into electricity. Needless to say, if an entire building could become a self-contained electricity supply, the implications would be enormous.

Advice to Investors

Given the ever-changing nature of solar power technology, it would be wise to stay abreast of the technology trends described above as much as it would be to continually monitor just the companies. Certainly the stocks mentioned here are among the current leaders in their respective categories, but these organizations really are only as good as their technology. And, that only matters if their products are profitable as well as competitive.

We feel smallcap stocks in particular can quickly surface ” often without warning - as worthy investments since their respective companies are nimble. Either way though, the industrys projected growth is undeniable, so one company or another is going to benefit from the dollars being poured into the efforts described above.

For investors who want to make the most of these trends, the first step is simply to find a way to monitor how these advancements ” and the companies making them ” are progressing. The Small Cap Network newsletter is designed to do just that, so subscribing to the free publication is highly recommended.