Energy Conversion Devices has just announced an increase in independent directors serving on its board from four to six through the appointments of Pasquale Pistorio and George A. Schreiber, Jr. That brings the total number of directors to eight.

This news follows their recent announcement of a narrowing Q4 loss which raised their stock price 15% on the same day.

The reality is that post-Enron, billion dollar companies must be perhaps more cautious than ever and the appointment of additional independent directors to keep an eye on things has to be welcomed.

A major shortcoming for ethanol producers in the USA, is that outside of the midwest, it is very hard to come by.

So I was intrigued to hear that Green Plains Renewable Energy has just finished renovating the the rail spur running from Red Oak, Iowa to Shenandoah. The spur, will serve the 50 million gallon per year ethanol plant being built by Green Plains in Shenandoah, Iowa.

Rail transport - long derided in the States - works at its best over 1000s of miles, carrying large amounts of freight. That's why one can expect to see a lot more of this kind of ethanol-train link up in the years to come. I don't doubt that Californians and New Yorkers would buy ethanol / E10 / E85 if they could get their hands on it. But distributing large amounts by diesel trucks over big distances has just not been cost-efficient.

As oil prices have risen, so train freight starts to look like a better bet.

Readers of this blog may well be aware of my scepticism towards European wind turbine manufacturers succeeding outside of the cossetted European market.

So that's why it's fascinating to read that Vestas, the Danish world no. 1 turbine manufacturer is to invest 500 m singaporean dollars (that's about $315 m USD) over 10 years in an R&D centre in the world's most successful (albeit not democratic) city state, Singapore.

I think the story here is that they are not looking to get into the Singaporean market. Singapore sees itself as Asia's R&D capital. It is the massive potential of China and India that they can only tap into with a local presence.

I expect more European firms will reach these conclusions very soon. Right now, there are too many wind firms chasing not enough contracts on the old continent.

Asia is the most promising market of them all.

Clipper Windpower, the American wind company listed on London's AIM, a vertically integrated manufacturer to wind farm operator, has just posted a pretax loss of 11.1 mln usd for the first half of 2006, up from a loss of 7.2 mln the prior year.

There's more to this story though; sales are increasing at a much faster rate. The company also reported for the six months ended June 30 2006 sales of $7.1 m against $2.5m for the six months to end-June 2005.

So when will they make a profit?

Rising sales on less slowly rising losses, it reminds me of Amazon . . .

The big picture greenhouse gas that everyone is aware of is carbon dioxide. Yet carbon trading companies are also eyeing up the potential of methane - 23 times or so more potent than CO2 and presumably, 23 times more valuable.

The coal industry has also noticed - coal and methane occur naturally together. Companies like Alkane Energy have a head start.

According to Evan Evans, vice president and director of engineering for the Boulder, Colo.-based Econergy International Corp, there may be ". . . an opportunity in Wyoming to generate new revenue streams in a carbon trading regime".

Further evidence here of the correlation between oil prices and the fortune of alternative energy companies.

As it says, "The falling cost of conventional fuel has also taken some of the shine off alternative energy. Ethanol producers Aventine and Verasun have both lost nearly a third of their value since early August. Another ethanol company, Hawkeye Holdings, was forced to postpone its initial public offering last week. "

Ethanol of course is the most sensitive of the alternative energies to conventional oil prices. For all that, I think the fall in oil prices has been overplayed. It seems more likely that what is happening is that we are testing the bottom of a new trading range. That now seems to be $60 - $80. All in all, I think there are still more reasons why the price of oil could still go up, rather than down.

A war with Iran, possibly next year being one of them . . .

Hoku Scientific, the first Hawaiian company to be listed on the Nasdaq, receives high praise indeed from Zack's Buy List, citing " . . . exceeded earnings estimates in four consecutive quarters and has reported a profit in six straight quarters. One analyst raised his numbers for this year. Over the past month, this year's estimates have increased 25%".

And yet, this company is 64% down on 1 year ago !

I've got my doubts about Hoku being a fuel cell developer and a solar business. Perhaps like many fuel cell companies, Hoku has just found it very tough to bring a product to market.

An interesting piece here about Brookfield Asset Management (link to be functional within 12 hours) - making the point that BAM " . . . with a focus on hydroelectric generation, . . . is one of the lowest cost producers of electricity in North America. They generate, transmit and distribute electricity in Ontario, Quebec, British Columbia, New England, Pennsylvania, Maryland, New York State, Louisiana and Brazil".

What is striking about the company is that it has over $1 billion in free cash flow generated annually.

With hydropower, the only thing that can really interfere with the steady cash flow is an inadequate rainfall period. This can raise hydropower prices quite quickly, although BAM by having diversified hydro resources is reasonably hedged against this.

As reported here, several biofuel companies that had planned to IPO are now holding back and have yet to set a date. These include Hawkeye Holdings (holding back) and AS Alliances and US BioEnergy Corp who have registered but not yet given the date.

Hesitating to call the market for any IPO is nothing new but the nervousness around biofuels is quite marked.

Some of the concerns about biodiesel and bioethanol are;

i) will the price of oil stay high and go higher? Not everyone thinks so, at least in the short-term.
ii) do the environmental benefits add up? Claims of carbon neutrality are now highly disputed and outside of the USA, not everyone sees the benefit of replacing biodiverse forestry in Brazil and Malaysia with vast tracts of industrialized monoculture.
iii) is it scaleable enough to create energy security by eliminating the need for all oil imports? Almost certainly not.

So that's the case for pessimism.

On the other hand . . .

i) the odds of a conflict between the USA and Iran continue to rise and this would send the price of oil into orbit. My guesstimate is that this will almost certainly happen before President Bush leaves the White House. A terrible event of course that no one would want, but one can't ignore that conflict in the Middle East has indirectly been very helpful to the alternative energy industry by boosting the price of oil and I see no reason for this to change.
ii) biofuel - because it is higher octane - provides tangible environmental benefits in cleaner air, producing much fewer particulates. This is particularly relevant in biodiesel.
iii) it's still a tiny industry and nothing grows in a straight line. Just to reach a mere 10% of global transport fuel, would require enormous compound growth for some time to come. So look at it as a 10 year growth story, not a few months.

Nevertheless, as far as alternative fuel vehicles go, I would rank hybrids and plug in hybrids with greater potential over the next 10 years than biofuel.

Let's see . . .

Renewable Energy Corp has just announced investment plans equal to $122m to quadruple solar cell production and to double solar module production over the next two years.

What really interests me about this is that they are not choosing to make this investment in a low cost Pacific Basin country, but aim to expand current facilities in Norway and Sweden - arguably two of the highest cost countries in the world to manufacture.

Perhaps that just goes to show, if you're in the high margin part of the value chain supplying a commodity in shortage of supply, you can get away with almost anything.

And still make a profit !

Suzlon Energy, India's champion of the wind industry, has just announced plans to invest Rs 15 billion (that's $326 million) into expanding manufacturing capacity.

I used to think that for manufacturers of large wind turbines for export over any great distance would be next to impossible. They are simply too huge and cumbersome. That was and is certainly true of German manufacturers. But Suzlon by manufacturing in India is turning this idea on its head. They are selling into the USA from India - very impressive. Just yesterday, the company also got a Rs 11.9 billion ($258m) order from US-based John Deere Wind Energy to supply 247 MW of wind turbine capacity. That's actually a good price for John Deere - wind turbine capacity has risen substantially from a few years ago from $1m per megawatt to $1.2 - $1.3. The rise has been due to the increase in raw materials like steel that go into the turbine towers.

VRB Power Systems Inc. (TSX-V: VRB) has just sold a 10kWh VRB-ESS(TM) to Eskom Holdings, one of the world's largest utilities based in South Africa.

Energy - or rather electricity - storage is critical for the breakthrough for alternatives like wind and solar that can provide only direct current unpredicatable loads of electricity, albeit at a fixed cost. What is noticable though is that high tech energy storage (like here) appears to be making far more of an impact as a UPS (uniterruptable power system) for hospitals, airports and as per here, telecoms infrastructure over diesel backup generators. This is because of their much faster start-up times. 30 seconds for the best diesel generator, well under a second for systems such as these.

Ideally, what we need to see is electricity storage systems (other than hydropower - reservoir storage) so scaleable that they can provide 100 Megawatts of power for eight hours flat and sell it into the spot market during the day. That really could work to bring down spot prices that can cripple industry.

A good discussion piece here on Reuters about solar stocks.

I'm a bit disappointed though that the author merely mentioned a handful of american listed stocks, 1 German one and a few Japanese companies. This is a global industry with listed companies alll over the world.

And a quick look at altenergyinvestor.org tells you who they all are.

Oil prices have taken a tumble and the alternative energy IPO boom so strong earlier this year has dried up. So it's encouraging to see that Prometheus Energy is planning to list on AIM. Like many of it's American brethren, it is being drawn to London's AIM market, because of the high cost of regulatory compliance following the Sarbanes Oxley Act - something I've written about here before.

The company plans to extract waste methane from landfill and coal mines, liquefy it and turn it into transport fuel. This is all pretty low-tech stuff and I like it. Air pollution in cities would end in short order if cars, trucks and buses ran on natural gas rather than petroleum and especially diesel. Methane - the most powerful greenhouse gas - has very few impurities which create the particulates, or in layman's terms, the black stuff in your nostrils.

The environmental priority for cities is to reduce air pollution - not reduce carbon emissions which perversely encourages diesel. That's why companies like Prometheus are a step very much in the right direction.

Early on at AEI, it was obvious that what people wanted to know was;

who are all the fully listed (i.e. not OTC) alternative energy companies which pursued alternative energy as a major part of their business, thus creating genuine alternative energy exposure for AE investors - globally?

So I do find it ridiculous of some alternative energy sites to list major vehicle producers as alternative companies, because a corner of the research division produces the odd fuel cell and flex-fuel / hybrid vehicle which makes up less than 1% of their total sales. Similarly, GE - an industrial collosus - is the world's second largest producer of wind turbines but this is a very low percentage of their overall sales. And there's no point in including Wacker Chemie AG in solar stocks, although a siginificant producer of polysilicon, when according to their annual report, Wacker polysilicon contributes just 5% of their sales and not of all of that is to the solar industry, but to the semiconductor industry.

Alternative Energy Investors are not interested in either bit-players or blue chip firms doing a cameo role.

So I wanted to let you know we have added some new stocks to our list and after careful analysis, excluded some other candidates that might have been included elsewhere.

Our new stocks - going up shortly - are;

Biodiesel
i) Biopetrol Industries
ii) EOP Biodiesel

Biogas
i) Schmack Biogas

Solar
i) Centrosolar
ii) Reinecke & Pohl Sun Energy
iii) Roth & Rau
iv) Sunline

Hydro
i) Avista
ii) Brookfield Asset Management
iii) Idacorp
iv) PG&E
v) Portland General
vi) Transcanada

Wind stocks;
i) Nordex

Which brings our total to 141.

We are just starting to see a clear correlation between the price of oil and the fortunes of alternative energy stocks. Nowhere it would appear is this more marked than with solar and biofuel stocks. With oil prices now falling to a 6 month low this needs to be taken into account.

I think what this shows is a couple of points;

i) the price of oil trumps the price of carbon by a multiple (and will continue to do so) as a widely understood price signal for or against alternative energy investment - carbon markets because they are small and new, lack liquidity and long-term future pricing
ii) solar and biofuel stocks are starting to be looked at as sectors in their own right influenced by the global economy - rather than strange and exotic curiosities that behave uniquely as individual companies

Oil, like all prices never goes one way forever. For an excellent review of oil prices from 2004 - 2006, I recommend this wiki here.

An excellent article here "Silicon shortage strikes industry" by Tom Abate which sums up the solar industry's conundrum in a mere 500 words.

I'll try and do it in a lot less;

i) Polysilicon shortage creating prices of $75 - $80 per kilo compared to $32, 3 years ago
ii) This hampering industry growth from 67% in 2004 to 30% in 2005 and to an estimated 10% in 2006
iii) This affects the solar industry but has a negligible effect on chipmakers
iv) Only a few companies make silicon; Hemlock Semiconductor Corp. in Michigan; Wacker Chemie AG in Germany; Tokuyama, Mitsubishi Materials and Sumitomo Titanium of Japan; and REC Group (you could also add MEMC)
v) Long lead-times and expense of bringing new silicon plant online

What the industry needs is an online silicon marketplace with futures contracts pricing out 10 years - it seems to be a very illiquid material and the spectre of “. . . solar procurement people traveling around the world with suitcases full of cash” is not a scaleable situation for an industry that likes to think it has the brightest future of all.

ECD has just made some new appointments;
Since the death of co-founder Iris Ovshinsky, ECD may now be going through some big changes. Not least in new staff appointments . . .

Sanjeev Kumar as vice president and chief financial officer; Jay B. Knoll as vice president and general counsel; Paul Reynar , vice president-manufacturing; Jack Schutzbach , director of human resources and business administration; and Gary Morin as chief information officer.

I'm not saying it was related, but yesterday was a bad day on the market for ECD - the stock closed down 8.55% (delayed quote prices from advfn now available on our website). Last July, UBS reduced its buy rating for the stock from 52 to 48.

It is now at 31.86.

Spire Corp has just announced in quick succession two siginificant pieces of news;

i) A new product - a 100 MW turnkey solar module production line

ii) A contract for it's Bandwidth semiconductor subsidiary with Principia, worth over $16 m in revenues over 3 years

Some people might take the view that the solar boom is a new gold rush, so the best place to be invested is in the guys selling and making the shovels and shallow pans because the returns were - on average - higher and the risks much lower. It may be a crude analogy, but it's always worth looking at things in new ways. So translating this idea to Spire is worth some analysis. Spire does the "shovel production and distirbution" - selling solar manufacturing equipment, turnkey module manufacturing lines and turnkey cell and wafer production lines. It also does the relatively vanilla solar work - "gold-prospecting" - designing, manufacturing and integrating photovoltaic systems and modules.

Anyway the long and short of this is this;

if I was taking a bet on the best future returns in the solar industry, I'd rather be part of the former than the latter.

In this very interesting interview by Red Herring, Solarworld's CEO, Frank Asbeck was asked if there might be a crash in silicon prices, given that so many companies are now building extra capacity. This is something I've been banging on about in these pages for some time. His answer was very telling;

"Right now we have faith in scarcity. We will have that situation for at least three to five years. Silicon producers will grow with the market, and the market is boosting from maybe €8 billion in sales to far beyond €30 billion in 2010. We have high growth rates, but we still have enough space to grow. "

Also, have a look at this article here - Solar: 3 reasons for optimism which in some detail explains that an increase in government support, an easing of supply bottlenecks and growing demand means that the outlook for solar is still very bright indeed.

Plenty of people are waxing lyrical about the world's largest solar power plant just constructed in Germany by Solon and using Sunpower cells.

Actually, there are quite a few companies who have made a claim to the world's largest solar power plant . . .

This one in Portugal, when completed in January 2007, although a notionally lower capacity of 11 MW, will almost certainly have a higher load factor and produce more kilowatt hours in the Portuguese winter than in Bavaria.

Then there's Stirling Energy Systems plans for a MASSIVE 500 MW plant in California - announced with great fanfare last year, but we have heard little since.

Israel also has plans in place to build a 100 Mw plant in the desert - to be finished by 2012.

Solar power has until now proven very difficult to scale up to megawatt capacity. Most often the countries that could afford it, couldn't really spare usefully the large land requirements. It is only now that some of these barriers are starting to fall . . . expect plenty more world's largest solar plants in the next few years.

Norwegian Company, Renewable Energy Corp, is doubling its polysilicon production capacity to nearly 13,500 metric tons.

This follows from the construction on a $600 million production facility for solar-grade polysilicon in Moses Lake, Washington. It will add 6,500 tons per annum. Solar capacity is the chief asset of this company -they have more than anyone else, measured by tonnage, in the world.

I like Norway and the Norwegians. But I just can't figure out why a $7 billion Norwegian firm would want to list on the Oslo Stock Exchange and nowhere else !

I also think the name doesn't lend itself to brand recognition. In norwegian, "Renewable Energy" might not show up too much on www.google.no. But in english, any company name with "renewable energy" in the title runs the risk of being drowned out by everything else about it on the internet.

Consequently, in spite of REC being one of the world's largest alternative energy companies, viritually no one has ever heard of it. Meanwhile plenty of people have heard of say, China Biodiesel or Suntech Power Holdings because they have listed on the LSE or the NYSE and have names that say something specific about the company.