I actually took this from PBS here, which credits the Cleantech Group.
There are a few reasons that solar energy has attracted so much funding, but the main ones include the fact that solar is such a broad field, solar has already proven successes, and that solar has a pretty clear path to a pretty big market.
Solar Energy technology pretty much is any technology that extracts energy from the sun. This includes solar PV, concentrating solar PV, solar thermal, and concentrating solar thermal. Within each of these are multiple subsets. Solar PV consists of monocrystalline, polycrystalline, thin film, triple-junction, and dye-based cells. Concentrating solar PV can be low (3x concentration), medium (10~100x concentration) and high (~1000x concentration). Solar thermal for heating can be simple 1x roof-top water heaters. Solar thermal for utility scale power generation can be tower configurations, trough design, linear Fresnel, or dish designs.
And, it doesn't stop there. Companies which lower the amount of silicon used and companies which allow for cheaper silicon to be used have been funded. Companies which improve the production yield, or better improve manufacturing processes have been funded. Companies which lower the cost of installation, or improve the tracking of solar modules have been funded. In short, anything that can lower the cost of electricity, anywhere along the solar value chain is of interest.
Why is this? Well, basically energy is a commodity. Barring any kind of "feel good" attributes of green-energy, most people don't have any clue what energy turns their lights on. In a hyper-rational, non-subsidized world that has no clue about external factors like global warming, the day that solar is 1 cent/kWh more expensive than the cheapest form of power, nobody wants it. The day that it is 1 cent/kWh less expensive than the cheapest form of power, everyone wants it. And by "everyone", we mean all 6 billion people on the planet. This is the ultimate tipping point.
So, VCs understand that there is a big market, and this market will crack open if solar power can be made cheaply enough. A lot of the cost of solar PV modules has been their silicon content, which has driven investment into anything that will use less silicon. Concentrating solar PV assumes that by replacing the expensive silicon part within a module with cheaper lenses and mirrors, the overall cost of solar energy will drop. Thin-film solar modules attempt to drastically reduce the silicon content (or eliminate it entirely) by using different materials. Solar thermal, in whatever form, expects that, for utility-scale electricity generation, the best approach is to generate steam and spin a turbine - benefiting from a lot of the work done in the past on thermal power plants.
It's an interesting situation, and one that is encouraging. Back in my Ballard days, when fuel cells were going to change the world, Ballard's mantra was that "we'll make the fuel cells, other suppliers will solve all the other problems". Those "other problems" included hydrogen storage, hydrogen infrastructure, and vehicle manufacturing. There was a huge chicken-and-egg problem which Ballard struggled to overcome. Yet, in the solar industry, there seems to be room for many of these innovations and business models, and the single-mindedness of "decrease cost per watt" has focussed the entrepreneurial community in an extremely positive way.
Next time - more specifics on the technology and path to market.