The primary objective of this program of research is the characterization of the energy requirements and energy production potentials of the Solar Breeder concept. This quarterly report documents the results of a careful and extensive study undertaken to assess the energy expenditures of the prevailing manufacturing technology of terrestrial photovoltaic cells and panels. The five major production processes in the current technology are: silicon reduction, silicon refinement, crystal growth, cell processing and panel building. One of the most important results of this study is the fact that the energy payback time for a typical solar panel produced by the prevailing technology is only 6.4 years. Furthermore, this value drops to 3.8 years under more favorable conditions. Since energy payback times as high as 40 years have been estimated for space cells, this relatively short payback time reflects the rapid progress made in terrestrial photovoltaic manufacturing. Moreover, since the major energy use reductions in terrestrial manufacturing have occurred in cell processing, the payback time directly illustrates the areas where major future energy reductions can be made - silicon refinement, crystal growth, and panel building. The comprehensive research approach used in this study includes the examination in detail of the major production process and sequences of the current technology and the assessment of each of the steps of energy expenditures. Energy expenditures included direct energy, indirect energy and energy in the form of equipment and overhead expenses. Payback times were developed using a conventional solar cell as a test vehicle which allows for the comparison of its energy generating capability with the energies expended during the production process. Finally, the Solar Breeder is described from a systems viewpoint and the significance of payback time and panel lifetime as important systems parameters are pointed out.