Ausra Inc.’s concentrated solar thermal plant.

Forecasts for the solar industry’s immediate future are cloudy, but analysts are predicting a clearer picture in the longterm.

The October 2008 extension of the Investment Tax Credit (ITC) led industry insiders to predict a windfall of investment in renewables. A study by Navigant Consulting (NYSE: NCI) frequently cited by tax credit supporters claims that an eight-year extension would create 440,000 permanent jobs and spark $232 billion in investment by 2016. But given the overall economic downturn, analysts are now softening those numbers and predicting a less rosy 2009.

“The tax credits may not work as effectively as we had hoped,” says Monique Hanis, a spokesperson for the Solar Energy Industries Association (SEIA). “The bottom line is that we may not see the same kind of growth we would have seen.”

Likewise, Jeff Osborne, who researches energy for investment banking firm Thomas Weisel Partners Group (Nasdaq: TWPG), predicted a “choppy” 2009, following a drying up of available credit. Though Osborne writes that he expects an eventual loosening up of credit, he says he anticipates that it will remain tight well into the year, which will result in limited funds for new projects, distributors, installers and solar cell producers.

Osborne also predicted an oversupply hitting in mid-2009, which could be exacerbated by lending difficulties. Some producers, he says, “remain in denial” about the impact markets can have on the solar industry and will continue to produce until they face oversupply. With prices dropping about 20 percent, the overall effect will be a “market shakeout” from which “more losers than winners” will emerge, Osborne wrote.

Despite what could be a rough 2009—or at least a rough first quarter of 2009—analysts remain optimistic about the industry’s long-term future following the ITC extension and a new administration stepping in to Washington, D.C.