The cascade of money pouring into companies producing thin film solar panels — which promise to lower the cost of solar power — is radically changing analyst predictions for the industry.

Most recently, we’ve seen whopping investments into the sector, including $300 million for Nanosolar and $104 million for Ava Solar. Analysts now say thin film will account for a big portion of the solar market in just a few years: up to 40 percent by 2012, according to the latest report.

The Prometheus Institute did the research with Greentech Media. It disavowed previous “overly conservative methodology” and took into account new manufacturing investments in the sector.

That 40 percent figure contrasts with the levels being predicted just two months ago. In July, for example, I reported that Lux Research said that thin film solar panels would make up 28 percent of the total solar power market in 2012, reaching sales of $19.7 billion.

And way back in January, BCC Research had even more muted expectations, forecasting 45 percent year-over-year growth for thin film — strong, but significantly less than standard silicon photovoltaics.

True, those are all numbers from different research groups, but my feeling is that the overall prediction trend is swinging toward the expectation that thin film solar will become a dominant force. In the race for grid parity, it’s the cheapest technology that wins. And aside from just funding, projects like Optisolar’s 550MW solar farm show that thin film might actually have the edge its backers have been swearing it has.