Last week, JA Solar (NASDAQ:JASO) shed some light on the shaky solar situation over in China. Fellow countryman ReneSola (NYSE:SOL) followed up yesterday with some unsettling news of its own.

Like LDK Solar (NYSE:LDK) and MEMC Electronic Materials (NYSE:WFR), ReneSola is a supplier of the wafers that folks like Suntech Power (NYSE:STP) and Solarfun Power (NASDAQ:SOLF) fashion into solar cells. This firm has generated some remarkable growth, with over 100 megawatts of wafers -- an even balance between the high-efficiency monocrystalline and the cheaper multicrystalline variety -- produced in the third quarter. Annualized capacity is poised to hit 585 MW by year end.

That's all well and good, but ReneSola's profitable expansion requires somebody to buy all these wafers. Over the past few weeks, a whole bunch of the company's domestic customers chose not to. In other words, they reneged on their purchase contracts. International customers are apparently meeting their obligations, but ReneSola acknowledged that "a significant proportion" of output is contracted to Chinese firms.

This is big news, and the newswires appear to have missed it entirely. But when solid companies like JA Solar are temporarily idling 40% of their production lines, I suppose it shouldn't come as too much of a surprise.

Just how temporary these dislocations prove to be will dictate the extent of devastation owing to this solar deflation. Every company is, so far, putting a pretty rosy spin on things, but ReneSola still chose not to issue guidance for 2009. I would personally prefer to see a greater washout before dipping a toe into these swirling solar waters.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.