The conversion efficiency of a PV cell is the proportion of sunlight energy that the cell converts to electrical energy. This is very important when discussing PV devices, because improving this efficiency is vital to making PV energy competitive with more traditional sources of energy (e.g., fossil fuels). Naturally, if one efficient solar panel can provide as much energy as two less-efficient panels, then the cost of that energy (not to mention the space required) will be reduced. For comparison, the earliest PV devices converted about 1%-2% of sunlight energy into electric energy. Today's PV devices convert 7%-17% of light energy into electric energy.

Of course, the other side of the equation is the money it costs to manufacture the PV devices. This has been improved over the years as well. In fact, today's PV systems produce electricity at a fraction of the cost of early PV systems.