Solar shares fell alongside the Dow Jones Industrial Average and other stock indices Wednesday, with SunPower Corp., First Solar, Evergreen Solar Inc., Suntech Power Holdings Co. and Canadian Solar Inc. all falling well over 10 percent.

SunPower (NSDQ: SPWRA) fell 17.7 percent to close at $40.94 per share, First Solar (NSDQ: FSLR) fell 13.69 percent to $123.52 per share, Evergreen (NSDQ: ESLR) fell 14.6 percent to $3.51 per share, Suntech (NYSE: STP) fell 16.6 percent to $20.85 per share and Canadian Solar (NSDQ: CSIQ) fell 17.6 percent to $10.37 per share.

All the financial ups and downs have made the economy a key topic of conversation at the Solar Power International conference in San Diego this week.

As the Dow Jones Industrial Average and other indices plunged last week, rebounded this week and fell again Wednesday, solar companies have been trying to figure out how the credit crunch and the stock market roller coaster will impact the industry.

Some industry insiders say the solar industry is somewhat buffered from the economic storm and could help stabilize it, while others say the difficulty in raising capital could be a problem for companies trying to grow manufacturing and install projects.

California Gov. Schwarzenegger even weighed in on the discussion, on Monday saying a focus on the environment will boost the economy and create green jobs (see Schwarzenegger: Solar Can't Be Stopped).

"Of course we are now facing tough economic times, but that's why we need to focus on solar and [the environment]," he said. "We should not listen to those who say [that] should take a back seat. That's just plain wrong."

It's still unclear whether companies will have a tougher time closing large rounds of project financing to meet their aggressive expansion plans.

But in what might be one small positive sign, Innovalight, a thin-film solar startup, has closed $5 million in debt financing from Leader Ventures and Silicon Valley Bank, the companies announced Wednesday (see Earth2Tech post).

The company is developing a solvent-based process for suspending silicon nanocrystals in a liquid ink solution and printing them on different substrates (read more about the company here and here).

Meanwhile, earlier this week, concentrating-solar company Soliant Energy said it raised $21 million in venture capital Tuesday and JinkoSolar, a Chinese silicon-wafer manufacturer, said it raised $35 million (see Earth2Tech post).

The size of solar venture-capital deals has skyrocketed, as VCs have closed larger greentech funds, competition for solar deals has increased and solar companies have reached the point where they need capital to build larger factories.

Solar companies raised $1.5 billion in 26 rounds in the third quarter, compared to $1.05 billion in 71 rounds in the whole of last year, according to Greentech Media's Venture Power Report (see Greentech Investments See Record 3Q).

And some VCs are positioning themselves to take up some of the slack from companies that might no longer to able to get debt financing (see VCs to Solar Startups: A Deal You Can't Refuse).

In a newsletter last week, for instance, SJF Ventures said it is "actively seeking companies with several million dollars in sales and exciting new growth opportunities that they cannot pursue via debt financing due to the current capital markets crisis."

Companies such as Nanosolar, AVA Solar and SoloPower each raised more than $100 million in deals that included venture capital in the third quarter.

But Nathaniel Bullard, a senior analyst at New Energy Finance, said there's not enough venture capital available to make up the debt financing needed to do utility-scale projects.

"This [economy] is certainly going to give people pause - anyone who needs to raise debt in a possible dead market, if you're not someone who's got equity lined up or VC funding," he said. "Debt financing is nonnegotiable. If you need it and can't get it, you can't build."

Chris Gronet, CEO of thin-film solar firm Solyndra, said that the financial markets aren't likely to impact his company, even though it plans to expand manufacturing capacity as fast as it can, because it has investors "with the resources and the long-term vision" to get through this time.

"We have to keep in mind that energy is a long-term issue," he said. "We believe the economy needs cleantech to help in the recovery, but the planet needs cleantech in order to survive."

Still, he said, the company is watching to see if the tightening of the credit market will impact solar project financing.

"We're keeping an eye on it," he said. "But so far, so good."

Bob Chew, who was president of SolarWrights before it merged with Solar Works and who will head the residential business for the newly formed, as-yet-unnamed company, says he expects the sluggish economy and credit situation will lead to more solar leasing next year.

As some customers shy away from spending the hard upfront cash to install systems themselves, leasing programs - which allow customers to finance the upfront costs of an installation in exchange for signing long-term contracts to buy electricity produced from the system – could become more attractive, he said. 

Meanwhile, Jim Jenal, CEO of solar installer Run on Sun, said he thinks the shaky stock market will have little long-term impact.

"I tend to take a longer-term view, and I think this is going to shake out," he said. "It seems to me right now that people are very unstable in their outlooks. I think once the election – either way – there will be greater stability. I don't expect the credit crunch as such to last long term."

Julia Hamm, executive director of the Solar Electric Power Association, said the economic situation may have a short-term impact on the solar industry, but that she expects it will impact solar less than other industries.

After all, the solar industry is used to dealing with fluctuating policies and markets, she said. "It's been on the roller coaster ride its whole existence," she said. "Smart companies are aware of this and know how to weather short-term [challenges]."

Also, she said, utilities are moving full-speed ahead with solar installations, as a new tax-credit program passed earlier this month makes previously excluded utilities eligible for the credits. 

"While we could maybe see a short-term downturn in residential and commercial markets - although hopefully not [now that the new tax credits have passed] - the utility [market] can be a bridge to keep the industry growing," she said.

Utilities in states such as California have been scrambling to meet requirements that they get a certain percentage of their electricity from renewable sources. They will still be working to meet those targets in spite of a weak economy, Hamm said. 

"They're not going to say 'Time out, pause,' because the economy's bad," she said.