Commercial & Residential Solar Solutions

Energy Industry Update: February 22, 2010 Detailing the Repercussions of Shrinking Margins for Silicon Wafer Manufacturers

XsunX, Inc. (OTCBB:XSNX), the developer of advanced, thin-film photovoltaic (TFPV) solar cell technologies and manufacturing processes, updates its shareholders on the shrinking margins of silicon wafer manufactures and its varying repercussions on the entire photovoltaic (PV) industry.

The solar industry overall began to experience increased demand again in the fourth quarter 2009, and most analysts predict demand will continue to increase year over year as government-based adoption policies continue to take hold on a global basis. Greentech Media Research recently predicted anticipated annual growth rates for solar of about 48% through 2012. Meanwhile a report by New Energy Finance found average costs in the U.S. market fell 30% over the ten years preceding 2008, and final numbers for the 2009 period alone may show as much as another 50% (before subsidies) reduction to PV pricing.

Over the past year, this significant fall in the price per watt for solar panels may be the direction needed to bring down solar electricity production costs, but it does not appear to come without cost and risk to the silicon PV industry. This change may allow the thin-film market to continue to benefit from this new era in pricing and demand.

“While average selling prices (ASP) for silicon-based modules have fallen, improving how silicon competes with current thin-film offerings, a significant cause for these ASP reductions appears to have come from the reduction of operating margins to razor thin proportions,” said Tom Djokovich, CEO, XsunX, Inc.

For example, REC Group, one of the worlds largest silicon wafer manufacturers, indicated in their most recent public filing that ASP continues to fall quarter over quarter for their silicon PV wafer business leading some industry analysts to predict that margins may fall deeply this year to only 8% from 17% in 2009 for RECs PV wafer business, raising a red flag for the silicon PV industry as it strives to continue to compete with emerging thin-film offerings.

Meanwhile, at XsunX we believe the young thin-film PV industry still has numerous opportunities for cost reductions from innovations all along the value chain, involving new materials, processes and installation technologies. A reduction to margins alone will not benefit the industry as a whole. Thats is why XsunX is working to develop new thin-film manufacturing techniques, such as our cross-industry hybrid technology for manufacturing high performance solar cells made from thin-film Copper Indium Gallium (di) Selenide (CIGS). Once the technology is commercially available, we believe these new processes will provide current silicon users a less costly PV technology for solar modules.

Djokovich adds, “We anticipate that our new manufacturing processes for CIGS solar cells will be able to maintain healthy margins that would incentivize manufacturers to invest in this new manufacturing approach. An important part to our business objectives, and what gives the thin-film market the position to better compete with silicon, is the ability to offer a product in a form factor that allows its rapid adoption by an existing solar module assembly industry. With over 80% of this industry using silicon-based solar cells this provides an opportunity to further reduce costs for PV while allowing manufacturers to enjoy respectable margins.

For more information about XsunX, or to subscribe to receive weekly news about the solar industry, please visit http://www.xsunx.com.

For XsunX, Inc. investor relations, please call (888) 797-4527.

Safe Harbor Statement: Matters discussed in this news letter contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate”, “believe”, “estimate”, “may”, “intend”, “expect” and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company

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