The bankruptcy of solar panel manufacturer Solyndra last month has left many people wondering about the future of solar industry in the U.S. That turn of events didn't stop the U.S. Department of Energy from sponsoring its biennial Solar Decathlon this fall, during which college-age students designed and built houses powered by sunlight. Nineteen teams from around the world gathered from September 23 to October 2 to show off their solar-powered homes on the National Mall in Washington, D.C.

As in previous competitions, each dwelling was judged on 10 criteria, including comfort, market appeal and energy balance—the energy generated by each house versus how much it consumed. But this year, for the first time, the Solar Decathlon included affordability as one of its judging criteria.

"By initiating the affordability contest this year, we wanted to emphasize that many of the energy-efficient features in these amazing houses are within reach of many Americans," Richard King, director of the Solar Decathlon, said in a prepared statement.

In the past the lack of a spending limit made the Solar Decathlon more of a conceptual competition. Germany dominated the 2009 contest by plastering the entire outdoor surface of their building with expensive 11.1-kilowatt photovoltaic cells. The home generated twice as much energy as it consumed, but its cost of $650,000 to $850,000 made it impractical for most home owners.

This year's teams (which did not include Germany) were penalized if the cost of their abode exceeded $250,000. For comparison, in 2010 the average price (pdf) of a new home in the U.S. was $272,900; five of the competing teams built homes that were less expensive than this national average. The structures were compact, but several also achieved "net-zero"—they produced as much electricity as they used, helping potential homeowners to save on energy bills. For a team including students from the Stevens Institute of Technology in Hoboken, N.J., and The New School in New York City, affordability was the top priority right from the start. Their two-bedroom "Empowerhouse" [shown in the video below] was the least expensive home entered into the competition, ringing in at $229,890. The home's 4.2-kilowatt solar panels are small, in order to reduce up-front costs, but the team's faculty project manager, Chris Steffens, thinks the building will reach net-zero over the course of a year. Within the next few months, Empowerhouse will become a home for a family in Deanwood, a neighborhood in Washington, D.C., thanks to Habitat for Humanity International—an organization that provides housing for people in need. The nonprofit is adopting the design for its new units in the District of Columbia area.

A team including students from the California Institute of Technology and the Southern California Institute of Architecture (SCI-Arc) opted for eight-kilowatt solar panels, which brought the price of their house up to $263,000 and put them in third place for affordability. The larger arrays, however, meant that on a typical day, the building captures more energy than it uses—that extra power could potentially be pumped back into the grid at a profit. The SCI-Arc/Caltech house [described in the video below] tied for first place in the energy-balance contest, along with six other designs.

Buying a home for $263,000 is still not feasible for a large percentage of Americans, but luckily it's becoming cheaper to retrofit already-existing structures with solar panels. Lawrence Berkeley National Laboratory recently released a study showing that the average cost for residential photovoltaic systems dropped to $6.20 per watt in 2010, down from $7.50 in 2009 and $11 in 1998. Prices are expected to continue falling as manufacturing costs decrease and financial incentives increase.

Whereas the Decathlon entries this year differed in their strategies to achieve energy independence on a budget, most of the teams emphasized that reducing consumption is an important part of making solar power affordable. Proper insulation, energy-efficient appliances and LED light bulbs can make a big difference, says Andrew Gong, a Caltech senior and lead electrical engineer for the SCI-Arc/Caltech team. "We can make all the solar panels we need, but it will be easier to achieve net-zero over the nation if we have that much less consumption."

The 19 dwellings featured at this fifth Decathlon make it tempting to agree with Elisabeth Neigert, project manager for the SCI-Arc/Caltech team, who does not see the failure of a solar company like Solyndra as a bad sign for the solar industry as a whole. "No one should be discouraged," she says, "about the possibilities and the importance of solar power, and the impacts it's going to have on daily life within the next decade."