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SpectraWatt Suspends Factory Plans, Expects Production Delay

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Intel (s INTC) solar spinoff SpectraWatt has put its plans to build a factory in Hillsboro, Ore., on hold after being unable to get enough financing, The Oregonian reported this week.

CEO Andrew Wilson told the newspaper that SpectraWatt is searching for an existing building that it could retrofit for less, and it is considering leaving the state. He also said the change of plans will delay SpectraWatt’s first solar-cell shipments by five or six months.

The company, which was raising a $50 million round of funding led by Intel in June, said then that it expected to ship its first solar cells from a 60-megawatt factory in the middle of this year. SpectraWatt didn’t respond to requests for more information Thursday afternoon.

The setback is the latest sign of tough times for solar companies. As a recession is making capital scarce, analysts are predicting an oversupply of solar panels that could lead to a pricing plunge. Jenny Chase, a senior associate for solar at New Energy Finance, expects some 4 gigawatts of panels to go begging this year.

Signs of trouble are everywhere. For one, take all the layoffs. In just the last month, Day4 Energy (s DFE), GT Solar (s SOLR), Emcore (s EMKR) and Advanced Energy (s AEIS) all have announced layoffs, and analysts say more are coming.

“There’s going to be a lot of that,” said Nathaniel Bullard, a senior analyst at New Energy Finance. “Expansion plans are difficult to do and it’s hard for people to forecast the market [in the next year]. Margins are going to be compressed.” Of course, layoffs are happening all over the technology map.

Other solar projects also are being canceled and delayed. In November, BP Solar (s BP) announced that it would close a solar-cell factory in Sydney at the end of March. The news came after the company in October scrapped a $97 million expansion it had planned for a solar-ingot factory in Maryland. In December, German solar-cell manufacturer Q-Cells (s QCE) temporarily halted production at its factory, to clear stock, while U.S. solar-cell maker Evergreen Solar (s ESLR) suspended plans for an $800 million factory in Asia and closed its pilot plant in Massachusetts.

And earlier this week, LDK Solar (s LDK) reported that its first polysilicon plant had not fully ramped up by the end of last year, as previously promised, and now expects to reach full production in the middle of this year. The company plans to produce between 3,000 and 5,000 metric tons of polysilicon this year instead of the previously expected 5,000 to 7,000 metric tons.

At the same time there are a few brighter signs pointing in the opposite direction. Suniva last month opened a 32-megawatt solar-cell factory in Georgia and plans to grow its capacity to more than 100 megawatts in the next two years. Sharp Corp. also said this week it would build a previously announced solar plant by the end of this year, which is earlier than expected.

Industry insiders believe there’s light at the end of the tunnel. With climate-change and energy-security concerns growing globally, analysts say they have no doubt that the solar industry will survive this downturn, and it could come out ahead if lower prices gain it a larger market. But before that happens, you can expect more bad news ahead.