German utility RWE AG (RWE.XE) said Tuesday it is considering electricity production from photovoltaic solar facilities, after a sharp drop in component prices in the past few years helped improve the economics of the nascent technology.

"The costs of photovoltaic solar energy have declined considerably and are gradually moving toward those of wind power," said Hans Buenting, chief financial officer of RWE's renewables unit RWE Innogy.

Photovoltaics--or PV--is a method of generating electrical power by converting solar radiation into direct current electricity using semiconductors.

Prices for PV components have more than halved in the past five years, with the drastic price erosion further accelerating since 2009, according to Germany 's solar energy association BSW.

Industry observers have attributed the sharp drop to increasingly tough competition from Asian solar equipment makers that import their products to Europe .

"We hadn't expected the extent of the price decline," said Buenting, adding that photovoltaic solar power could become an attractive investment for RWE in southern Europe and North Africa .

Buenting said that the company is considering participating in a photovoltaic solar project that is being developed by the Sahara Desert solar power initiative Desertec.

RWE Innogy has been focusing predominantly on wind power. However, the company also owns interest in a thermal solar power plant in southern Spain . Solar thermal energy is a technology that harnesses sun radiation by bundling it with large industrial mirrors to produce steam, which in turn drives a power generator.
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