NEW YORK ( TheStreet) -- Barclays is out with a more bullish call on solar demand for 2011 on Wednesday, raising its outlook for solar stocks broadly, and saying current discounting of stocks misses the mark in trying to peg the true demand outlook.

Barclays thinks that the solar industry will grow 20% year over year, while average sales prices decline 15% -- more or less the consensus expectation for ASP declines. The bullish call from Barclays is predicated on the fact that current solar pricing reflects the 15% decline in ASPs, but in a flat demand environment.

Barclays is pegging 2011 solar demand at 16 gigawatts, versus a consensus demand call of 13.7 GW.

Barclays expects "greater supply of low cost solar panels, improving profitability of downstream players, additional cost reduction potential of low cost supply and 'rush' to complete installations ahead of subsidy cuts to drive demand upsides over the next few quarters."

Barclays argues that the solar stocks that it covers are capable of absorbing additional 15% price declines in 2011, and the downside risk to a demand falloff or bigger ASP decline than expected are limited.

Part of the Barclays' view is that as solar demand moves away from Germany and to markets with higher subsidy levels, the blended subsidy levels could decline at a slower rate than ASPs, improving the outlook for downstream players in solar. Such a scenario would create higher returns for solar project investors, and stimulate demand.

The Barclays bullish outlook in a stock-specific context highlights Trina Solar ( TSL) and Solarfun Power ( SOLF) as the module players with the most near-term opportunity to move up. Trina was upped from a hold to a buy at Barclays.

In any event, all the solar module makers received a price target upgrade from Barclays, except Yingli Green Energy, which remains at a target of $14. Trina received the biggest boost on a percentage basis, from $21 to $30. Trina shares were up close to 5% on Wednesday morning.

Among wafer players, Renesola ( SOL) received a boost from $10 to $12. Barclays upgraded ReneSola to overweight. Along with Trina, ReneSola was the only other solar stock to not just see its price target raised by Barclays, buts its rating taken up from hold to buy.

ReneSola was only up 3% on Wednesday morning, but among solar stocks, it was seeing the most volume, surpassing its average daily trading volume of 1.5 million shares within an hour of the market open.

Barlclays also upped its price target on First Solar ( FSLR) from $126 to $140.

-- Written by Eric Rosenbaum from New York.

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