By Laura Isensee - Analysis

LOS ANGELES, California (Reuters) - Even as solar companies cook uphigh tech ways to cut costs, the next push to make the renewable energysource more economical could come from workers who bolt panels ontorooftops and mount them across empty fields.

So far, panels -- a system's most expensive piece -- account for thebiggest drop in the total cost, falling more than 50 percent from about$4.20 a watt in 2008.

Most U.S. and European makers are now selling panels near $2 perwatt, while some low-cost Chinese players sell panels at about $1.85,said J.P. Morgan research analyst Christopher Blansett, while thin filmmaker First Solar Inc is the cost leader at about $1.50 or $1.55 perwatt.

That decline has put a spotlight on installation, which now makes upa greater share of the total cost, and has prompted installers,developers and even panel makers to look for low-tech tricks, likequick fasteners and predrilled holes.

"There's no rocket science. It's literally doing things better and more efficiently," Blansett said.

After the shiny blue and black solar panels leave the factory,technicians have to bolt the panels into steel or aluminum frames,mount them to rooftops or across fields, connect them to inverters andstring the wiring to feed electricity to homes, businesses or a powergrid.

The big challenge for installers is that "there is no single itemthat moves the needle," said Lyndon Rive, chief executive at SolarCity.The privately held company designs, installs and finances systems forhomes and businesses in California, Arizona and Oregon.

"It's doing one thousand little things better," Rive said, such asmanaging inventory so crews don't make extra trips to a hardware store.

INSTALL COSTS TO DROP

The U.S. solar market is on track to grow 35 to 45 percent in 2009and reach about 460 to 500 megawatts, said Alfonso Velosa, a researchdirector at Gartner.

Residential systems are expected to remain about a third of the total U.S. market this year, Velosa added.

While companies like SunPower Corp and Suntech Power Holdings Co Ltdare working on cutting-edge technology to make more efficient solarcells, Velosa said they are "starting to hit the limits of what thematerials can do."

The solar sector leans on government incentives to compete withtraditional power sources, but industry experts believe it will beeconomically viable in the near future.

Toward that goal, installation costs could drop 5 to 15 percent nextyear, executives from Suntech, Solon and other companies said at theSolar Power International conference last week in Anaheim, California.

Akeena's new Andalay branded panels have built-in micro-inverters toconvert the direct current electricity produced by solar panels intoalternating current rather than requiring a separate unit, as mostsystems do.

Heavyweight panel makers have also gone back to the drawing board todesign products so more work that used to happen at the constructionsite is done in the factory.

Solon and Suntech both recently launched new systems for the U.S.utility market that the companies say shave time and money off theinstallation costs.

U.S. based SunPower Corp and Energy Conversion Devices have also introduced new products to make rooftop work easier.

"If you have to have to weld something or construct something (inthe field), it's quite expensive," said Olaf Koester, chief executiveat Solon's U.S. unit.

Koester cited Solon's new Velocity system, which uses built-in railsinstead of a frame, as an example of a design that streamlines theinstallation work.

Companies that install solar systems are also moving to morestandard systems instead of customizing each site, which takes time andmoney and can create new problems every time.

"We almost used to pride ourselves on all the custom work we did.But it's too expensive. We need to be able to compete with the retailprice of electricity," said Mike Hall, chief executive at privatelyheld Borrego Solar Systems Inc.

(Reporting by Laura Isensee; Editing by Gary Hill)