Here is a recent article from the NY Times illustrating supply and demand in action in the solar panel market.
Solar panel prices are falling because...
An increase in the number of firms manufacturing polysilicon has increased the supply of this input used in the production of solar panels.
Increased supply of polysilicon lowers the price of polysilicon (as the polysilicon supply curve shifts to the right).
This lower input cost causes the supply of solar panels to increase (shift to the right), which causes the price of solar panels to decrease.
This increase in supply of solar panels appears to be coupled with a decrease in demand for panels (we can assume that this is largely due to lower incomes and cash-strapped governments eliminating subsidy programs).
Result? Lower prices of panels and an increase in quantity demanded.
Sounds good so far. More solar power is a good thing, right? But, what else might happen if prices stay low into the long-run?