Nasdaq listed FuelCell Energy, has just posted its Q3 results for fiscal 2005.

After the closing bell Monday, FuelCell posted a loss after paying preferred dividends, of $18.6 million, or 38 cents per share. That compares with a year-ago loss of $19.2 million, or 40 cents per share. Today, the stock closed up nearly 8% to 10.30.

What makes FCE different to other fuel cell companies are that it is situating itself at the larger power end of the market, up to 2 MW and above all their patented, "Direct Fuel Cells" which produce hydrogen directly from natural gas. This circumvents the cost of producing and transporting pure industrial hydrogen into a fuel cell.

UK Aim-listed Solar Integrated Technologies has struggled - in stock performance - since going public over a year ago. Recently, it has recovered from its low of 95 and was very close to a new high of 186p, although this is not much different from its IPO price.

Arguably the company has had problems translating from the USA its business model of providing solar roofing membrane solutions to the European market. In California, this has worked well for them. There is however up to twice as much solar radiation per square metre during the Californian summer (2000 watts plus) than there is in Germany - and quite a bit more in winter. So even with Germany's massive solar subsidies, this is no like for like for comparison. Perhaps that is why - almost uniquely among solar stocks - SIT has done so poorly.

Last Friday SIT dropped 20p to 150p. Today the UK had a bank holiday which meant that there were no trades.

So keep an eye on what happens to this stock tomorrow when the market opens again.

Writing the Power Sector Commentary for the Institution of Electrical Engineers, I commented how the rise of alternative energy stocks represent a brand new sector. And this new sector will develop its own new financial products such as funds, derivatives and exchange-traded funds.

Over the next few years, it is possible that subsectors like tidal, bioenergy and energy storage may start to make a much bigger impact on the Public Markets. Although alternative energy has been with us a long time, it is very much a newcomer to the stockmarket.

This really is just the start.

Intelligent Energy is now planning again to IPO, following a failed reverse takeover of Dickie Walker Marine. Dickie Walker’s securities were delisted on August 17th after failing to achieve compliance with the NASDAQ SmallCap regulations, and hence the two companies are discussing a mutual release from the proposed acquisition.

Of particular interest is that the company claims to have developed a class-leading power to volume performance in excess of 2.5kW per litre for their PEM fuel cell.

2004 was a busy year globally for both the wind and solar industries. But it's worth stacking them up against each other to do a basic comparison;

2004 - Newly Installed Capacity

Solar - 927 Megawatts

Wind - 7,976 Megawatts

2004 - Industry turnover in Billions of US Dollars

Solar - 6.5

Wind - 9.79

The quick conclusions are then;

1. Wind per installed megawatt is much cheaper than solar
2. Solar production is way behind wind in added capacity
3. Solar is not far behind wind in turnover

However, I suspect that in turnover in billions of dollars, solar power will overtake wind power possibly as soon as 2006. But for the investor, the paradox is that there are many more pure solar play stocks than wind stocks. And I expect this to continue . . .

In an upbeat article in this week's Time Magazine entitled "Rising Sunlight - How Japan's lack of oil helped make it the world leader in solar panels it was mentioned that for Kyocera - a japanese conglomerate which produces 120 MW of solar panels a year, they now account for 5% of the company's total sales and 12% of its operating profit. Kyocera is listed on the Tokyo Stock Exchange as well as the NYSE and the Nasdaq.

Solar has had much success in Japan. But a crucial reason that was not mentioned in the article is that the price of electricity in Japan is perhaps the highest on earth - 24 cents per kilowatt hour for a retail customer.

Alternatives only become real alternatives when traditional sources of energy are close in price.

In Japan, this has clearly happened.

Centrotec Sustainable AG is planning to hive off its solar division and float it in Spring 2006.

There has been a pretty fantastic boom in German solar stocks the last couple of years and solar businesses have never been valued higher. One can't be sure that this will last until Spring next year, but if it does, Centrotec should do well.

For reasons I have not been able to discover, australian listed Ceramic Fuel Cells rose 300% on Friday to close at AUD 0.60.

What's fascinating is that In terms of its business model, product range and target market, CFC is almost identical to Ceres Power - as discussed below. It is partnering with large utilities like RWE and New Zealand's Powerco, to target the Combined Heat and Power Market, with its fuel cells that run off natural gas.

The promise of domestic CHP fuel cells is to substantially reduce emissions - perhaps by half - compared to a typical hot water boiler and using electricity from the National Grid for the same amount of expended energy.

It used to be thought that it was more a question of if fuel cells would ever come into the home. Now it's looking more like when. There are though two questions that need to be answered;

at what price are consumers ready to buy fuel cells?

and will governments step in to incentivise them?

My guess is that over the next 2 to 3 years we will find out the answers. And Ceres Power and CFC will either be on the road to greatness or the dirt track to nowhere.

London Aim-listed Ceres Power, a company that plans to mass produce solid oxide fuel cells for the combined heat and power market, has just signed up a critically important partner, Centrica. Centrica, formerly known as British Gas, is the dominant player in the business of providing gas to British homes for heating and cooking.

This could be a breakthrough development. By using the fuel cell to make electricity in the household, fed by gas from the UK's gas network, the national grid is bypassed leading to much lower power costs. Typically, two-thirds of the retail price of electricity are in its distribution from the power plant to the end consumer.

On a more practical level, a boiler takes up a lot of space, but this fuel cell isn't much bigger than a pack of CD cases. If Ceres Power do become the first company to mass manufacture fuel cells for the domestic market, their target has to be to bring costs down to that of a replacement boiler.

Then the world's fuel cell market just might be their oyster.

Ceres Power closed on Friday at 122p.

Today, O2Diesel reported a net loss of $1.62 million, or ($0.05) per share, for the three months ended June 30, 2005, as disclosed in its Form 10-QSB filed with the Securities and Exchange Commission. This compares to a net loss of $1.85 million, or ($0.07) per share, for the same quarter in 2004.

The market appeared pleased with the announcement, the stock today closing up over 4%. Commenting, Alan Rae, O2Diesel Chief Executive Officer, said, "The second quarter saw progress in several areas as we begin the transition from product development to commercial sales of O2Diesel".

The question for me remains though, while ethanol production appears very popular in the USA and the benefits of mixing it with diesel are environmentally tangible, is this a company that can do the logistics of fuel supply as well as the research?

We will see.

Your ideal location for a geothermal power plant is on active volcanic terrain. The enormous ground heat makes for a very inexpensive method to power a steam turbine. Naturally, very few choose to live in such extreme conditions, so geothermal is just not a big player in most countries energy scenes, although there are still considerable geothermal opportunities to be had with hot springs. There's just one exception - Iceland, a volcanic island - which receives almost 100% of its power from geothermal resources.

Perhaps that's why then there are very few listed companies engaged in geothermal energy power production. But NYSE-listed Ormat Technologies is one of them. Based in the remarkably appropriately named town of Sparks in Nevada, Ormat Tech's business is the design, development, building, ownership, and operation of geothermal power plants and recovered energy-based power plants.

And late last week, Q2 profits were up by 16%. Ormat closed today at $20.59, very close to it's high of $21.10.

Spire Corporation, a developer of solar energy manufacturing equipment, has just posted Q2 sales, 73% up on the 2nd quarter 1 year ago. And the stock at the time of posting has risen 40% accordingly.

Spire said what had lifted results in the quarter were sales of solar equipment and solar systems - including the sale of two photovoltaic module assembly lines and a major solar installation in the Chicago area - as well as a sale of a licence to the company's solar technology.

There are many solar companies competing to make solar modules with one another, particularly in Germany. There are though far fewer making solar cells. And there are fewer still - like Spire Corp - who know how to make solar energy manufacturing equipment.

It looks like a great niche in a growing market.

With the fast expanding solar industry, there is tremendous competitive pressure to secure silicon, both further out in time and up and down the supply chain. That's why this deal between Solon AG and Q-Cells is just typical.

Solon AG is a solar module manufacturer, i.e. a component assembler of solar Pv panels. Q-Cells make mono and polycrystalline silicon cells, which the company claims have highest efficiency commercially available at 16%.

The agreement enables SOLON to buy forward solar cells from Q-Cells for a total price of EUR 350 million during the period to 2010. Solon closed yesterday at 29.22.

Solarparc AG, formerly known as Windwelt AG prior to 22nd June, has just developed a solar PV systems that follows the sun, increasing power output by up to 30%.

The name change by the way - which in English translates from Wind World to Solar Park -is to represent the strategic future of the company. They believe that there is far more of a future for them in the solar business. Yesterday, Solarparc AG closed at 16 Euros.

As this recent article describes, the size of investment in alternative energy is going up. Quite apart from the twin drivers of rocketing oil prices and the policy requirement to reduce C02 emissions, there's another reason. Heretofore, the alternative energy business was largely dominated by small and medium sized companies. No more - especially in Germany where renewable electricity now accounts from 10% of German power.

Just take a look at these 2 big players and what they're doing - Allianz and GE;

Giant German insurer Allianz said it was raising its stockholdings in renewable energy groups from 300 million euros to 500 million euros.

And mighty US conglomerate General Electric plans to double its revenue from sun and wind energy to 15 billion euros over the next five years.

As I remarked in an earlier post, rising oil prices are a driver for alternative energy. So I feel vindicated when John Rice, CEO of GE Energy, the world's 2nd largest manufacturer of wind turbines says

“We’ve had some large wind customers tell us that at a natural gas price of $5 per (million Btus), that wind is competitive without the production tax credit . . .That’s always a function of the actual project. But at $5, you’re in the hunt, no question.”

So windpower is already cost competitive in parts of the United States, depending on the price of electricity in that state. A recent Financial Times article mentioned that the cost of the most efficient US windpower was $48 a megawatt hour and the cost of a megawatt hour of gas was between $36 and $72.

GE of course, is a massive New York Stock Exchange listed company, so its wind turbine division, despite making $2 Billion of annual sales don't actually amount to much out of their enormous total - over $130 Billion in 2003 alone. Still, their purchase of Enron Wind in 2002 for just $325m looks smarter every day.

For those of you new to the categorisation of fuel cell stocks, this Wall Street transcript interview with Pearce Hammond published yesterday is an excellent start.

Hammond points out that if you look at Ballard, Plug Power and Fuel Cell Energy, they are 3 completely different business models. Ballard is fuel cells for automobiles, Plug Power for the backup battery market and FCE for the stationary base load power plant. He then further discusses each company and fuel cells in some detail.

As discussed earlier in these posts, there are also mobile micro fuel cells which we are likely to see shortly from Medis Tech.

Fuel Cell stocks had a huge following in the late 90s and then crashed spectacularly - admittedly along with many others. Now though, record oil prices, better technology and renewed investor interest all point to considerable growth potential for this sector.

Frankfurt listed Solar Fabrik yesterday closed up 11.34% at 13.75 a share.  As mentioned in an earlier post, they made a very useful stategic purchase of a wafer manufacturer. Perhaps this is still feeding through. It is however still short of its all time high of 16.79.

I always thought that fuel cell companies work in unglamorous industrial estates. Well Hoku Scientific - hoku is hawaiian for star - works out of Hawaii.

Their IPO was launched at $6 two days ago, closed down disappointingly at $5.36 but closed up yesterday at $6.40.

What makes this company unusual in the fuel cell business is that it is concentrating on the membrane components, not the whole fuel cell. It also enjoys backing from Sanyo. The target market is to provide membranes for a 1kw fuel cell for the japanese market - priced at about $5000.

There are quite a few companies looking to break into the domestic market for fuel cells. It just might happen in Japan first - where consumers already accept very high energy costs.

Nasdaq-listed Active Power, recently received another order for it's 1 megawatt class - the largest commercially available - flywheels. The company claims it is the leader in battery-free uninterrupted power solutions.

"This is our largest megawatt-class UPS order to date and offers conclusive proof that our high power UPS initiative is gaining strength," said Joe Pinkerton, CEO and Chairman of Active Power. "With its lightning storms and hurricanes, the outage profile of the Southeast U.S. can push conventional backup systems beyond their limits, but this is just the type of environment where our battery-free systems shine. We are beginning to see results from our efforts in a broad range of opportunities for this product in healthcare, data center and industrial applications. This installation also highlights the significant upfront work our OEM partner Caterpillar has been doing over the past several quarters."

Sometimes I think there could be a great synergy between a 50 kw wind turbine and a medium-sized flywheel. At the moment though, flywheels appear to be the preserve of large power applications.

As I've mentioned here before, a major barrier to costs falling in solar power these last few years, has been the rising cost of silicon. Not all solar companies however use silicon. Take DayStar, which yesterday traded up over 10%, closing at $14.21.

DayStar have developed a thin-film, copper-indium-gallium-selenide solar cell. Once you've got through saying all those words - CIGS for short - the important point is this; DayStar think they can make solar cells quite a bit cheaper than conventional silicon-based ones.

Definitely one to watch.

Millennium Cell closed up over 21% on the day to $2.22. As this article shows, MC is one of the leading companies trying to crack the problem of hydrogen storage.

"The most critical barrier to the hydrogen economy" says Steve Chalk of the Department of Energy, is creating a viable hydrogen storage platform. More specifically, weight, volume, cost and refuelling times are the limits right now. The DoE is now sponsoring research to meet these goals.

President Bush gave a speech 2 years ago claiming that any child born now should be learning to drive on a hydrogen vehicle. Right now, that's looking unlikely.

Another letter I had published yesterday in The Business newspaper in response to their story last week on the rise of Dirty Oil, made possible by higher crude prices. I argued that whilst shale oil and tar sands become more economic with higher oil prices, there is also a major reallocation by the market - in private and public markets - towards alternative energy. I expect this trend to continue.

Anyway, you can see my letter here.

In my letter printed in the Financial Times last Friday, I argued that solar PV power works best in remote locations with batteries. I'm highly sceptical about grid-connecting solar power. A 2 way electrical grid is fine, but grid-connected solar would only really make sense when it is cheaper than the grid. That way that national grid would be the backup. Consuming power as near to the point of production as possible would then be a smart idea, when the full costs of transmission and distribution are factored in.

Anyway, one company that does both on and off grid solar power is the solar division of ATS, a Toronto listed stock. The division is called Spheral Solar. And  as this page shows, all the growth these last few years in the solar industry has been in grid-connected solar power. Still, what the graph doesn't show is that grid-connected solar power is heavily dependent on government handouts.

So investors should bear that in mind and keep an eye on government solar policies.

The penetration of almost all alternative energy in Europe is determined by government mandate. So when targets don't look like they are going to be met, then new laws are proposed.

That's why this story about Europe's green heat market is significant. The industry is betting on a Green Heat Directive.

Very few listed companies are engaged in solar thermal. Plambeck Neue Energien AG though does have a division. It is most popular world over in Japan, China, Greece and Israel.

Frankfurt listed Phoenix Sonnenstrom AG, which yesterday traded close to a new high of EUR 15.05, had a very high profile political visit late last week. Gerda Hasselfeldt, Deputy Chairwoman of the CDU/CSU parliamentary group and crucially in charge of parliamentary group's energy policy visited Phoenix SonnenStrom AG.

And what she said was critical;

"in the event of a change of government, the current Renewable Energy Act would remain valid until the end of 2007. From 2008 onwards, there will be a follow-up provision assessing the suitability of incorporation of other instruments, such as the eco-tax and emissions trading. Should there be new legislation valid from 2008, PV plants that are already up and running will remain unaffected."

This matters because there is a very good chance that Schroeder will lose Septembers National Elections. And Germany's massive energy subsidies are being blamed - amongst other things - for woeful economic performance.

So German solar investors can reckon with guaranteed income streams from the feed in tariff of up to EUR 57 cents a kilowatt hour, up to 2007.

If ever you want to get a quick idea of how much windpower a given country has, check out this page.

In doing so, you'll quickly see why Denmark has the world's largest - and copenhagen stock exchange listed - wind turbine manufacturer, Vestas. Today it capitalizes at over $20 Billion.

It would also indicate that the sleeping giants in windpower are the USA and . . . China . . . if they built just a quarter as much as Denmark has per head, then few could dispute that windpower would be at the start of a very long boom.

A few days after the Energy Bill has been passed in the USA, now is a better time to reflect on what it means for the alternative energy industry.

Bioethanol - production target set of 7.5 billion gallons by 2012, up from 4.5 billion today and tax incentives for the creation of ethanol plants.

Fuel Cells - USD 2.0bn over five years for fuel cell research and development and USD 1.3bn for demonstration projects. There are tax incentives for customers who buy fuel cells for either vehicles or buildings and USD 450m to help state and federal governments buy fuel cells.

Wind - extension of the Production Tax Credit of 1.9 cents until 2007.

Solar - The first ever residential tax credit for solar energy in the past two decades.

So ignore all the partisan lobbyists claiming the Energy Bill only caters to big oil, does nothing for renewables etc. - there's really quite a lot here to encourage the take up of alternative energy.

Nasdaq listed Beacon Power, earlier this week announced acceptance of its flywheel demonstration by the California Energy Commission. Beacon's stock promptly rallied closing yesterday at 1.77 up from a low of 1.34 the day before. Flywheels are actually kinetic, or mechanical batteries, spinning at very high speeds (>20,000 rpm) to store energy that is instantly available when needed.

The company also makes solar inverter systems.

In alternative energy technology, it's easy to pay attention to the big ticket items like solar panels and wind turbines. But it is energy storage and power conversion devices that will make large scale integration of renewable power possible.

That's why Beacon Power looks to have a very good niche.

Nasdaq listed Millennium Cell has just reported a net loss for Q2 of $5.8 m. Today the stock closed up over 13% at $1.88.

Millennium Cell's corporate focus is to develop hydrogen battery technology through a patented chemical process that stores and delivers hydrogen energy to power portable devices.

The stock has clearly done well this past year, ranging from 80 cents, rising swiftly to as high as $3.15.

Now that's what I call volatility !

Plambeck Neue Energien AG, has just surpassed a stock target of EUR 0.95 set by a recent BUY upgrade by First Berlin by today closing at 0.96, 10.34 % up on the day. Plambeck is principally a wind company, developing and managing wind farms. Although the company also has much smaller interests in biomass and solar thermal energy.

The recently published half-yearly report showed a major increase in turnover from EUR 12.5 m to this year's 19.7 m.

Most of the prime wind sites in Germany have been taken and Plambeck is sitting quite pretty with just under 500 MW in onshore capacity. But Plambeck's future expansion will have to be offshore at sea and through its French partner, Ventura in France. And both of these have yet to become a major part of the business.