Solar energy exchange traded funds were sharply lower Wednesday as a disappointing forecast from LDK Solar (NYSE: LDK) and pricing worries clouded the volatile sector.

Weakness in prices for solar products will eat into profit margins for SunPower Corp (NasdaqGS: SPWRA) and LDK Solar, the companies said, according to Reuters.

LDK shares fell 4% Wednesday while another sector ETF component, Trina Solar (NYSE: TSL), dropped about 8%.

The stocks are holdings in alternative energy ETFs such as Market Vectors Solar Energy (NYSEArca: KWT), Guggenheim Solar ETF (NYSEArca: TAN) and iShares S&P Global Clean Energy (NasdaqGM: ICLN). The solar ETFs suffered losses of more than 3% Wednesday.

“We left LDK Solar’s investor day with the sense that all of the things going right for the company are overshadowed by deteriorating industry fundamentals that look set to push the solar market into oversupply no later than 2012,” Morningstar analyst Stephen Simko said in a recent note on the company.

“LDK’s balance sheet is heavily leveraged, and without continued financial support from government-sponsored Chinese banks, the company would have serious problems funding its operations and servicing its debt,” he added.

Market Vectors Solar Energy

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