UNSW will lead new research to make solar generated electricity as cheap as coal-fired power following a $5 million grant from the Australian Solar Institute (ASI).

The grant, the largest yet awarded by the ASI, will contribute to a $24 million collaborative research project between UNSW, China's Suntech Power and Sydney-based Silex Solar to improve the performance of commercially produced solar cells.

Director of UNSW's ARC Photovoltaics Centre of Excellence, Scientia Professor Stuart Wenham, said the research would aim to further the efficiency of world-leading solar cell technology developed at UNSW and find new ways of cutting the cost of production.

"Our aim is to develop new technology with a target of enabling PV to compete directly with fossil fuel-generated electricity," Professor Wenham said.

ASI Executive Director Mark Twidell said the Federal Government-funded Institute was investing in innovation to cut the cost of solar.

"We are pleased to support the world-renowned team at UNSW in collaboration with industry partners Suntech and Silex Solar through this groundbreaking project," he said.

Suntech, the world's leading solar cell manufacturer, and Silex, Australia's only commercial manufacturer of solar cells, will each contribute $6 million in direct funding and in-kind research resources to the project.

Dr Zhengrong Shi, Suntech chairman and CEO and a UNSW alumnus, said this latest initiative in a long history of collaboration with UNSW was central to driving solar innovation.

Silex Solar CEO Dr Michael Goldsworthy, also a UNSW alumnus, said the collaboration would ensure that the work of researchers would stay in Australia and benefit the local solar industry.

UNSW, Suntech and Silex will share equally in intellectual property arising from the collaboration.

Media contact: Peter Trute, UNSW Media Office | 02 9385 1933 | p.trute@unsw.edu.au