Until the big chill, the solar energy was red-hot, tearing along with a decade-long growth rate that averaged 50 percent a year.

Then the global recession hit – and the fizzling of subsidies in Spain and a credit crunch – which squeezed financing for many solar projects. Production slowed at plants making panels that turned sun into electricity. Prices fell sharply.

So now, despite climate-change legislation in the United States and a push for cleaner energy worldwide, a global industry shakeout looms, many analysts predict. And not a small shudder. They anticipate an earthquake of consolidation likely to leave only strong competitors standing.

Currently, some 250 companies around the world make solar photovoltaic modules.

“In five years, there probably can be only a couple of dozen of them,” says Travis Bradford, president of the Prometheus Institute for Sustainable Development in Chicago. “At most.”

Which companies will be the winners? The ones with deep pockets, cutting-edge technology, and a rigorous focus on cutting costs. They’ll need to be big enough to build a brand name and demonstrate staying power. As close observers explain, customers want to know that the solar-energy companies they buy from today will be around to honor their warranties in the future.

Although opinions differ on who the winners will be, four names keep popping up: First Solar Inc. and SunPower Corp., both based in the US; Sharp Corp., headquartered in Japan; and SunTech Power Holdings in China.

In their own way, these firms have already distinguished themselves in a crowded field. If they do emerge as winners, their host countries can probably bank on building networks of solar-energy related suppliers around them, analysts say.

Various kinds of solar technologies exist – from simple hot-water heaters for homes and pools to multiacre installations that can generate electricity on a utility scale. But it is photovoltaic (PV) technology, which turns sunlight directly into electricity, that’s the fastest-growing technology – and is already the largest component of the solar market in the US, according to the American Solar Energy Society, in Boulder, Colo.

Here’s a look at the four potential winners in the coming shakeout.

Leader in thin films

Within the PV industry, First Solar has been the model for how to succeed with innovation, many observers hold.

“There’s no doubt in my mind that First Solar offers the industry’s best quality management and the best quality product at the best relative value,” says Matthew Patsky, portfolio manager of Winslow Green Mutual Funds, in Boston.

Formed in 1999, the Tempe, Ariz., solar company burst onto the scene with a type of thin-film technology called cadmium telluride. Although less efficient than traditional silicon-based PV panels, thin-film modules cost substantially less to produce. Last year, First Solar had $1.2 billion of sales and a $348.3 million profit. (That 2008 profit level was more than double the prior year’s earnings.)

“Thin films came into production during the boom period in the industry’s growth, which allowed for higher-risk new technology. But First Solar was the only one to establish itself successfully during that boom,” says Ken Zweibel, director of the George Washington University Solar Institute in Washington, D.C.

While competition has been rising in the thin-film sector, First Solar has continued to sustain its leadership, analysts say. It “is the only company in the world that’s been able to produce solar modules at less than $1 per watt,” says Shyam Mehta, senior solar analyst at GTM Research, a market-research firm based in Cambridge, Mass. “And [it] is on its way to producing solar electricity at rates competitive with electricity from fossil fuels.”

First Solar has reported that in this year’s first quarter, its manufacturing cost had fallen to an industry-leading 93 cents per watt. All the while, it’s been enjoying eye-popping profit margins and is operating at full capacity.

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