Think of it as flexible glass, says CEO Dave Pearce.

Palios, a very small start-up, will try to commercialize a flexible coating for thin filmsolarcells that it says will both cut costs and allow thin film makers to penetrate a wider variety of markets.

Right now, thin film solar cells are somewhat of a paradox. The thin film refers to the fact that the material that converts sunlight to electricity-cadmium telluride, copper indium gallium selenide (CIGS), amorphous silicon-are applied as a film on a substrate. The solar cells aren't etched on like chip circuits as in crystalline silicon solar cells.

But that's where some of the thin part ends for many thin film companies. First Solar, for instance, puts its solar cells on glass sheets. So do the amorphous solar panel makers employing equipment from Applied Materials. These solar cells are then coated with a sheet of glass to seal them from the elements.

The dream is to put these solar cells on polymer or foil substrates and then seal them with a transparent coating. Some companies-Global Solar, Ascent Solar Technologies-but it represents only a fraction of the market.

The cost savings from swapping glass for a coating come in a variety of ways. First, a panel coated with a thin plastic membrane weighs less so the modules will cost less to ship. Installation can also be simplified. Forget hauling around large glass plates and screwing them into frames. Polymer coatings effectively will allow solar cells to be embedded into the flat membrane roofing that covers Wal-Marts and Targets. Membrane roofing accounts for 60 percent of all commercial roofs in the U.S. (Prediction: coating and installation will be two of the bigger issues in solar this year.)

Flexible encapsulants also make it easier to make roofing tiles.

"CIGS companies need barrier films," Pearce said. "We are going to save money in the balance of systems."

The coating can also be used to seal organic light emitting diodes (OLEDs) which many want to use as light sources. OLEDs have been plagued with problems in keeping moisture out.

Other companies have similar products on the market, so gaining traction won't be easy. Armageddon Energy, which makes a modular solar system, covers its cells in a flexible encapsulant from a major chemical company. Dow Chemical, which has invested in a CIGS company called NuvoSun also run by Pearce, has also been active in coatings lately. Johns Manville has created roll-out roofing with United Solar Ovonic.

Pearce, though, argues that Palios' encapsulant will be cheaper. It can also be made on a roll-to-roll process. Palios hopes to produce coatings-i.e. everything that sits on top of the solar cell to seal it in-for around $9.20 per square meter, or $9.20 per 100 watts of solar cells.

Palios, by the way, did not invent the material. It comes from a defunct solar company that's part of a larger conglomerate that filed for bankruptcy. Palios is buying the intellectual property from the estate. Palios will try to show off samples mid-year and complete the design of its roll-to-roll equipment and begin pilot production by the middle of 2011. By 2012, it wants to be in volume production.