Changes in the solar industry continue to happen from day to day as this dynamic market attempts to move to a more steady state. Before that happens, however, the industry is likely to feel more pain as either capacity falls to meet demand or we wait for demand to catch up with capacity.

Here are the noteworthy events from this week that solar investors should keep an eye on.

More bearish predictions
Bloomberg compiled six forecasts for solar installations in 2012 and found that analysts are expecting 24.8 GW of solar to be installed this year, down 10% from last year. Lower German demand is expected to lead the decline, but increased installations in both China and the U.S. ensure that conditions don't get even worse.

This will put even more pressure on manufacturers and hopefully cause some capacity to leave the market. I have put LDK Solar (NYSE: LDK) and Hanwha SolarOne (Nasdaq: HSOL) on the top of my list of companies in trouble if demand continues to fall. They have lower margins than competitors and are in a weaker strategic position that better brand-name companies in the industry.

What we'll have to keep an eye on in coming months is how China handles the solar industry. The country may be facing tariffs on solar exports to the U.S., although a decision on such drastic measures has been pushed out to May. There's also the complicated financing structure of most of the world's largest suppliers to consider. LDK Solar, Suntech Power (NYSE: STP), and Yingli Green Energy all have more than $1 billion of short-term debt, handed out by government-controlled banks, and as finances get worse they may have to consolidate or go under. But how exactly this process would work is unknown at this point.

Power-plant development efforts spread
U.S. solar manufacturers have been adding capabilities in both utility-scale and distributed solar power plant development for years, but Chinese manufacturers have been behind the curve. They've focused attention on adding capacity and lowering costs to remain competitive. That may slowly be starting to change.

Trina Solar (NYSE: TSL) announced that it's establishing two new sales and project development offices in China. The country's feed-in tariff is expected to drive demand in the country's sunnier areas, and this will allow Trina to not only serve those areas but also develop projects itself.

SunPower's utility and power-plant division had much higher margins than residential and commercial, showing that this is an important avenue for manufacturers to explore.

Are CIGS going to go big time?
MiaSole, one of the few remaining CIGS manufacturers, received another $55 million funding round this week and may be making more progress on its way to generating a product that can compete with Chinese manufacturers on cost and efficiency.

The company has hit module efficiency in production of 14% and hopes to be at 15% by the end of this year. Those numbers could make First Solar obsolete in the thin-film market, barring an acquisition.

MiaSole is still very small, with production capacity of just 150 MW annually and just 55 MW in the field right now. CIGS have been a hope of many solar observers for years, and MiaSole is at least worth watching as a potential winner in this space.

Foolish wrap-up
Earnings are out for the most part from the fourth quarter, and as I highlighted earlier this week, efficiency is playing a major role in the winners and losers. The other major differentiator is internal project development. SunPower is expecting to get up to 50% of its demand from utility and power plants, which is why it's so important for companies like Trina Solar to follow this lead. Power plants insulate a company from wild demand swings and ensure a certain level of production demand.

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