BP Solar Scraps Maryland Factory Expansion

Since then, many silicon makers have built new factories and signed long-term agreements with solar companies. Like farmers who plant too many acres when prices are high, these silicon makers could end up producing more than needed in the next few years. Recent research by the Prometheus Institute and Greentech Media predicted an end of the silicon shortage by the end of this year (GreentechMedia.com: "New Research Predicts End to Silicon Shortage" and "Oversupply of Silicon to Be Worse Than Expected").

But all that, of course, depends on demand. U.S. President Bush signed a bill Friday to extend renewable-energy tax credits -- and to enact a $700 billion bank bailout plan -- after the House of Representatives approved the bill earlier in the day.

The plan is nowhere as large as the incentive programs in Germany and Spain. But if the credits boost solar demand, and the bailout improves the financial markets, the situation might not be quite as bad as some analysts -- and companies -- fear.

Mueller said the extension of the renewable-energy tax credits wouldn't change BP Solar's decision to nix the factory plan. He also said oversupply is not a problem for the company, which is "selling everything we can make."

"We don't need additional casting and sizing [of silicon ingots] ," he added. "The facility is sufficient to supply its needs."