Photovoltaics present a difficult tradeoff to policy makers: on the one hand, they offer clear resource and environmental advantages over fossil-fuel-based electricity generation; on the other hand, they remain more expensive than conventional technology in most grid-connected applications. However, the dynamics of this tradeoff are changing as the technology develops. This paper presents a series of sensitivity analyses designed to illustrate the influence of various performance-related factors on both economic cost and environmental performance of building integrated photovoltaics. The authors then discuss a range of factors that are likely to stimulate further improvements and estimate the impact of these improvements over time on the combined carbon abatement cost of photovoltaics. If these trends continue, and there is a number of reasons to suggest that they will, BiPV cladding systems could be a cost effective means of abating CO2 emissions in European locations by 2010.