The state of the global solar industry today is, well, complicated. Manufacturers must now navigate international tariffs and China's sudden decision to slow installations, which could result in a grossly oversupplied market by the end of 2018. That's likely to squeeze margins across the industry in the short term and elevate the importance of technological superiority.

Investors might scoff at that idea. After all, better technology has long been held up as a key differentiator in the solar industry, but it has generally taken a back seat to economics. But that could change -- and sooner than many think. Leading solar cell and solar panel manufacturers are rolling out improved products in 2018 and 2019 that will provide an edge in both efficiency and economics. Investors who dare to peek over the horizon might glimpse a solar future clinched by next-generation materials.

Solar panels in the desert.

Image source: Getty Images.

Navigating the next industry downturn

Some of the largest technology gains will come from improved materials that are better at converting sunlight into electricity. Today, all solar panels rely on either crystalline silicon materials (70% of the market) or thin film materials such as cadmium telluride (28% of the market). (The other 2% was "unspecified", but one of the two materials.) Both materials have advantages and disadvantages, which generally dictates their use.

For instance, no company is better at wringing out electrons from silicon solar cells than SunPower (NASDAQ:SPWR). The company's X-series panels, which are available today, can hit up to 21.5% efficiency, although future improvements will bump that to the mid-20% range. However, the product will only be used for niche applications initially. The company's lower-cost P-series panels have a larger market opportunity and boast 19% efficiency ratings -- above the upper end of the range for mass-market silicon panels, which sits at about 17%.

Meanwhile, First Solar (NASDAQ:FSLR) is the undisputed leader of thin film solar technology. While the company's premium Series 6 panels tap out at about 17% solar efficiency, they make up for that with lower costs than silicon panels. That has allowed the thin film leader to rack up impressive margins in recent years thanks to a booming solar market. But with silicon cells falling in cost while gaining in efficiency, and global headwinds in abundance, the business may face more uncertainty in the next few years.

Beyond that, the whole solar market may be up for grabs, or at least more jockeying for position with the introduction of newer system designs and materials. Here are three wild technologies that could cement the solar industry's future.

Rows of utility scale solar arrays.

Image source: Getty Images.

1. Two-sided solar panels

Okay, so two-sided solar panels may not fit your definition of "wild". But given the simplicity of bifacial panels and the cost reductions they enable, there's no denying their significance for the future of the solar industry. Some estimates foresee power output increases of up to 25% and cost reductions per watt of 20%.

Canadian Solar (NASDAQ:CSIQ) thinks its market-first dual-sided panel could boost efficiency from a high of 18.3% to as much as 23.8% given the right conditions. That could make the company's less efficient panels more competitive with higher efficiency panels, such as those from SunPower, for certain utility-scale projects. The relatively simple change could have broad implications for increasing the geographic competitiveness of solar energy and accelerating the decline of fossil fuel power generation.

A worker installing solar panels on a roof.

Image source: Getty Images.

2. Perovskite materials

Whereas thin film offers cost advantages at the expense of efficiency, and crystalline silicon offers efficiency advantages for a slight premium, a new class of materials called perovskites might one day provide the best of both worlds. While there are many materials in this category to choose from, perovskites can generally generate energy from a broader swath of the light spectrum than silicon alone. Put another way, researchers think 30% solar efficiency is an attainable target. If they prove as cheap and easy to manufacture as expected, then the third-generation solar cells could lead to a significant drop in the cost of solar power.

Unfortunately, perovskite materials are still more lab trick than commercial reality. One major obstacle remains: The materials degrade relatively quickly. That could lead to dramatic power losses in a short period of time for a solar module, thus negating all other advantages. There are ways around that, however, such as pairing perovskites with silicon, and a start-up called Oxford PV recently unveiled such a tandem cell with a 27.3% efficiency rating. If it proves successful and commercially viable when it launches in 2019, then third-generation solar could be closer to reality than investors think.

Quantum dot solutions tuned to various colors in test tubes.

Solutions of quantum dots tuned to various wavelengths. Image source: Getty Images.

3. A quantum leap for solar

Although it gets lumped into the third-generation solar group, quantum dot materials are much further away from commercialization than perovskites. But the materials promise to really shake up the solar industry (and quite a few others). Why? Quantum dots are nanoparticles of semiconductor materials, and semiconductors comprise the basis for computing hardware and solar cells. But these are small. Really small -- measuring only a few nanometers across, or many thousands of times smaller than the width of a human hair.

However, these nano-semiconductors are small enough to be tuned to match the solar spectrum. That means quantum dot solar cells have a theoretical efficiency limit of 70.4%, compared to just 32% for single-junction silicon cells.

While novel cell configurations could lift existing materials beyond that roughly 32% efficiency "limit", quantum dots offer one unique advantage: They can generate electricity in the middle of the night. That's because they can be tuned to infrared wavelengths in addition to visible wavelengths of light, although night-time generation wouldn't come close to matching production during the day. Unfortunately, investors likely will have to wait more than a decade to see these capabilities hit the market -- but it's certainly a technology to watch for the future of solar power.

A hand stacking coins in columns against a sunset.

Image source: Getty Images.

A bright future for solar energy

In 2017 the United States generated 1.8% of its total electricity from solar power. That may not seem like much, but it's growing very quickly. In the first four months of this year the renewable energy source delivered 32% more electricity to American grids compared to the year-ago period. That will continue to soar as costs come down, investments increase, and technology improves.

So while the recent trade tensions and imploding domestic policy of China will have a short-term effect on the market and highlight technology differences among the major market players, the policy slowdown is only going to be a blip on the radar for the solar market in the long run. Beyond that, there appears to be a very bright future for solar energy, courtesy of some major advances in materials science.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool recommends First Solar. The Motley Fool has a disclosure policy.