First Solar will likely be able to find private debt financing for its projects -- the company said as much at a conference earlier this year when investors were concerned it might not get the DOE loans in the first place. However, any capital markets debt will be more expensive than the DOE loan, and will mean that First Solar cannot sell its projects to equity buyers at as high a price, reducing its earnings, and leading to a reduction in Wall Street estimates for its earnings power.

Rival SunPower ( SPWRA) also has a $1.2 billion loan with the DOE in the conditional commitment phase. However, the sale of a 60% interest in the company to French oil giant Total provided the company with $1 billion in debt financing that would likely allow its projects to proceed without the DOE loan guarantee. SunPower shares were only down by 0.5% on Wednesday.

Collins Stewart analyst Dan Ries wrote on Wednesday morning, "It is difficult to say if this...will delay these approvals (approvals beyond 9/30/11 may require a change to the underlying act, or in a sense an act of congress) or even prevent these approvals. FSLR's projects being based on proven technology and have credit worthy buyers in place to purchase the power generated, making these loans less at risk of default than the loan made to Solyndra, a manufacturer of an innovative (i.e. unproven) technology."

That said, the Collins Stewart analyst added, "The three FSLR projects that have outstanding 1705 loan applications (with conditional approval) are essential to our CY12 and CY13 EPS forecast for FSLR. These projects being rejected would have a material negative impact on EPS forecast, though FSLR would likely be able to financing these projects without a loan guarantee at a higher cost of capital (less profitable). The risks to our forecast have increased as the 1705 DoE loan guarantee program has come under fire due to the Solyndra bankruptcy. We know of no means by which the company can mitigate this risk, as this risk centers on the DoE and its reporting to Congress."

-- Written by Eric Rosenbaum from New York

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