The Federal Government has announced an $83 million solar research program in partnership with the United States.
The eight-year project will bring together six Australian universities, the CSIRO and the US department of energy.
Its aim is to create new technology that will reduce the cost of solar power.
Energy Minister Martin Ferguson says it is the biggest solar energy research investment in Australia's history.
"The funding will see the establishment of two strategic research initiatives, the $33m US-Australia Institute for Advanced Photovoltaics and the $35m Australian Thermal Research Initiative," Mr Ferguson said.
"These initiatives will accelerate solar technology development faster than either country could do working alone."
US-Australian Institute for Advanced Photovoltaics director Martin Green told Radio National this morning that Australia was leading the world in development of cheaper, better photovoltaics, the technology used in most solar panels.
"Australia is essentially providing the technology that has driven down the price of solar dramatically in the past four years," he said.
"We will be looking at ways at taking (photovoltaic) efficiency well beyond 25 per cent, perhaps to something like 40 per cent."
The project will also research solar-thermal power, which involves using mirrors to concentrate the sun's rays to boil water for turbines.
CSIRO National Solar Energy Centre manager Wes Stein says Australian research is creating better storage for solar-thermal power and smaller-scale technologies, which are driving down the cost.
"I would see solar-thermal being one of the lowest-cost forms of clean energy in the world in about 10 years' time," he said.
However, Beyond Zero Emissions executive director Matthew Wright says the project needs to look at real-world applications to compete with other clean energy leaders, including China.
"While we are busy with a bunch of nerds in the lab, (China) has got their nerds in the lab complemented by real commercial deployment, and that's how you advance an industry and create a renewable sector," he said.
US ambassador Jeffrey Bleich welcomed the partnership.
"We see the world the same way, we see the challenges in this region the same way," Mr Bleich said.