The global demand for energy is currently growing beyond the limits of installable generation capacity. To meet future energy demands efficiently, energy security and reliability must be improved and alternative energy sources must be investigated aggressively. An effective energy solution should be able to address long-term issues by utilizing alternative and renewable energy sources. Of the many available renewable sources of energy, solar energy is clearly a promising option as it is extensively available. Solar power, especially as it reaches more competitive levels with other energy sources in terms of cost, may serve to sustain the lives of millions of underprivileged people in developing countries. Furthermore, solar energy devices can benefit the environment and economy of developing countries. This paper illustrates the need for the utilization of alternative energy sources, evaluates the global scenario of installed generation systems, reviews technologies underlying various solar powered devices, and discusses several applications and challenges in this area. In addition, this paper addresses the costs of deployment, maintenance, and operation, as well as economic policies that promote installation of solar energy systems.