You take $1000 and use it to purchase a panel capable of 1000W. You take out a loan at 10% to do this, so you are paying $100/yr in interest.
You live in an area where you can get 6hr/day of good light over 200 days of the day, so your 1kW panel produces 6*200*1 = 1200kWh in each year.
The cost of this (to you, is $100) so the cost of this electricity is $100/1200 = $0.083/kWh, which is competitive with grid electricity.
Granted I've oversimplified things a bit (no installation cost, no DC to AC converter and grid adapter) but I'm also quoting a higher interest rate than you would be paying and I'm pretty conservative on the sunlight hours per year, and in a lot of areas you can get a credit from your utility company for the energy that you push back into their grid - and this credit can be at a much higher than normal grid rate. As well, there can be some tax savings for doing this.
The important point is that before Nanosolar came along the cost per watt was at least $5 for solar power - so the drop to $1/W is an industry-changing event and suddenly makes solar attractive to a whole new market place.