
The project begins in April 2008 and is being funded by the Engineering and Physical Sciences Research Council under the Supergen initiative.
Eight UK universities, led by Durham, are involved in the project: Bangor, Bath, Cranfield, Edinburgh, Imperial College London, Northumbria and Southampton.
They will work together with nine industrial partners towards a "medium to long-term goal" of making solar energy more competitive and sustainable, particularly in light of the recent rise in fossil fuel prices.
Solar cells are currently made from components such as the rare and expensive metal indium which costs approximately £320 a kilogram. The research team intends to reduce the thickness of the cells to cut production costs.
Making a solar semiconductor thinner by one millionth of a metre in solar cells generating one gigawatt of power could save 50 tonnes of material, the researchers estimate.
The team will also experiment with sustainable low-cost materials which could be used in the manufacturing of solar cells and on the use of nanotechnology and dyes on ultra-thin silicon to capture increased amounts of energy from the Sun's rays.
Principal investigator Ken Durose, a professor in the Department of Physics at Durham University, said: "With the rapid increase in fossil fuel prices and the recent government announcement about investment in nuclear power it is even more important that we look at long-term future energy generation from solar power.
"At present you would need tens of tonnes of very rare and expensive materials for large scale production of solar cells to produce sizeable amounts of power.
"Some of the materials currently used may not be sustainable in 20 years' time which is why we have to conduct research into alternative materials that are cheaper to buy and more sustainable.
"Our medium to long-term goal is to make a major contribution to achieving competitive photovoltaic solar energy, which we hope will lead to an uptake in the use of solar power."