Scientists at MIT, specifically Dr. Daniel G. Nocera, have announced a major breakthrough, not in energy production per se, but in energy storage. They describe the process as having "captured the essence" of plants' energy storage system. This advancement may very well prove to be the bridge between current solar technology and a technology that will in fact be affordable and scalable enough to make a real difference. Today's solar systems are just not quite "consumable" enough to provide energy for everyone; primarily because they only work when the sun shines and the battery systems leave much to be desired.
The basic idea is that sunlight would still excite photovoltaic cells and produce energy. This energy would be used to power the home (or other building) but instead of losing excess energy, or storing it in complicated, inefficient battery storage systems, the energy would be used to separate oxygen and hydrogen atoms from water molecules. The oxygen and hydrogen are later combined in a fuel cell and viola!
Read more here: http://web.mit.edu/newsoffice/2008/oxygen-0731.html