On the surface, Intersolar 2009 in Munich, Germany was business as usual: huge halls, filled to the brim with PV-related products of all shapes and sizes.

LDK hauled in raw poly rocks courtesy of its recently constructed plant. There was Applied Materials' gargantuan-sized module, on display from the bevy of customers it lined up last year. There was a sleek PV-powered speed racer in Solarworld's booth. BP Solar's booth featured an array of mimes lumbering around, face paint and all (part of the recently announced cost reduction plan, no doubt, but I haven't quite figured out how). Of course, there were scantily clad women in body suits handing out brochures with seductive smiles (no naming names, you know who you are).

And there were smiles all around. It was one hugesolarparty, and anyone who was anyone in attendance.

In other words, you wouldn't be blamed if you didn't get the sense that the PV industry is in the midst of one of its harshest business environments in recent years, the cyclical overcapacity phase of the business cycle exacerbated by the recession and the credit crunch. Not if you talked to these folks, at any rate. How was business, you might ask these folks (as I did)? Oh, fine. Just dandy. Never been better. Opportunities galore. In other words, it still looks as if we're in the denial stage here.

But if you looked hard enough, you could see the cracks beneath the surface.

Attendance was certainly down from last year, and well short of capacity. Conferences were sparsely attended.

At the Solarplaza conference held earlier in the week (one that featured a lot less spin), snap polls revealed that the overwhelming majority of executives and analysts think that demand will be flat or down from last year, and module prices will continue falling into 2010. When you try to reconcile that with the sheer multitude of cell and module manufacturers in the game today (it was staggering just how many such companies there were that I had never previously heard of), it provides a sobering reality check.

Year-end cell capacity by the end of 2009 will total 17 gigawatts. Compare that to, say, 7 gigawatts of demand (and given how few projects are being done right now, even that's optimistic), and what you have is competition, competition, competition.

The math is simple: idle capacity lines + near-term debt repayments + credit markets showing few signs of thawing = insolvency (DayStar, anyone?). In the meantime, the show, I suppose, must go on.