As I was quoted today in the Guardian, solar subsidies have had the perverse effect reducing the incentive of solar manufacturers to invest in non-silicon based solar panels. This might have prevented the silicon bull run keeping solar output prices high, whilst reducing their cost to the consumer.

That's why I think there's a lot to be said for solar investors to look at those companies that have eschewed silicon or greatly reduced its input - my guess is that this is a much better long-term bet if the political climate for solar subsidies turns sour.

Companies like Daystar Tech for example or Dyesol.

Like any growth story, alternative energy is difficult to analyze unless you can measure it.

So it's worth noting how hard people are trying to track this business with new indices. There are now at least seven clean energy indices including the Cleantech Index, the German Börse’s DAXglobal Alternative Energy Index, the WilderHill Clean Energy Global Innovation Index, and the Ardour Global Alternative Energy Index (see Clean Capital, Tracking Clean Energy Globally, and Cleantech Index Soup).

And now ETFs are being created to mirror them.

I daresay we'll get a few more indices but after a few years, one will be established as the definitive index. And my guess is that it will be global.

SAG Solarstrom - a solar stock from Germany - has blamed project realisation delays in Spain and Italy and sluggish demand in Germany reducing margins for a still sizeable Q3 sales figure of EUR 60 m.

The company CFO did say however that "In the period from July to September, we managed to reduce costs by approx. 15% by comparison with the first two quarters".

Breaking out of the cosy high-margin home market is a big challenge for German solar companies. To the best of my knowledge, none of them have done it yet - in scale.

There aren't many places more useful for a small power unit than on a boat at sea. So it looks like a good move for Voller Energy to appoint somebody specifically for Marine sales.

At the moment, this market is dominated by solar panels and micro-wind turbines. In some ways, you could argue that much micro generating technology early experience prior to the recent boom was primarily in yachts. And yacht sales are rising.

Bottom line; if you can afford a yacht, you can afford a fuel cell !

Of all the alternative energy industries, solar is the most globally integrated. Just take a look at the latest deal between Norway's REC and China's Suntech - both multi-billion dollar solar companies.

Renewable Energy Corporation has won an order for multicrystalline silicon wafers from Chinese solar cell manufacturer Suntech Power Holdings, worth 1.2 bln nkr over the next five years - that's about $180m.

REC posts third-quarter results tomorrow morning.

We've all heard of hybrid electric vehicles, but hybrid fuel cells is admittedly a first for me. Ballard power systems has just announced a new tie-up with the Federal Transit Administration to test two types of hybrid fuel cell buses.

According to Ballard's Chief customer officer "There are 36 Ballard-powered fuel cell buses transporting people on roads around the world today" which gives you a perspective of how far this technology has to go to become mainstream. It would be great to see Ballard making more sales direct to private companies rather than profligate government agencies. Some people think this may actually start next year with Ballard fuel cells for forklift trucks. And take a look at the company's own flash roadmap - quite entertaining but not very enlightening.

So when will we all be driving fuel cell vehicles?

A good piece here from a 2004 issue of Wired - "... the price of producing a fuel-cell vehicle must be reduced by a factor of 10 before the autos will become cost-competitive. The majority of the fuel cell cost comes from the membranes (30 percent to 35 percent) and the catalyst materials (40 percent) that are stacked in layers"

Since then though, fuel cell manufacturers have been hit by the commodities boom, because the price of platinum has risen from $10,000 per pound in 2004 to about 30% higher today.

This commodity boom has hit other parts of the alternative energy boom too - like the impact of silicon prices on solar and steel on wind turbines . . . raising prices when most thought they would fall

Norway's Renewable Energy Corp has just received a huge order from BP.

"The agreement, which is structured as a take-or-pay contract, has a base value of approximately 2.7 billion Norwegian crowns," REC said in a statement.

The solar industry is continuing to boom but prices are not falling after several years. I'm wondering if the vast subsidies paid by Germany, Japan, California et al are responsible for that. Margins in the PV business are high and so there is no incentive to invest in lower cost pv technologies that would have excluded silicon for example whose price has quintupled.

Reinecke + Pohl Sun Energy AG have just announced that they will the targets for turnover and earnings for 2006 which were given by the Executive Board. Among the reasons for missing the prognoses are changing market conditions which have hampered the sale of photovoltaic plants.

Like most solar companies, it has ambitious growth programmes which in this case have not been met. There aren't many industries where the target is to double sales in the first 6 months of the year thought to be realistic.

Digging a little deeper though, it's intriguing to hear that a major resignation in recent days that can't have helped was because the person who had to resign, Mr Müller, had to go to prison. What for I've no idea yet (does anyone know? Please comment) but the company emphasises that it is absolutely nothing to do with them.

Plug Power has just has received a follow up order of 120, for its GenCore backup fuel cell systems, from IST Holdings Ltd.

In his 2004 book, "The Hype about Hydrogen" Joseph Romm said "Price and payback trump almost everything else" - the insight I think of a true sage. In other words, while companies "... say they would like more reliable power (such as fuel cells), the vast majority are not willing to pay very much more for it".

2 years on, fuel cell sales are starting now to come through and this industry is starting to go places. Still, how many companies would choose to pay much more for fuel cells as an uniterruptible power supply over an advanced flywheel or even an off the shelf diesel generator?

Here's a post that touches on the crunch issue for many alternative energy companies;
Do you want jam today or jam tomorrow?

The posting talks briefly about Renewable Energy Holdings.

So here's my take on the jam - viewed as what is cost effective and able to generate profits free of government intervention.

Jam today technologies - now until 2010

Waste (landfill) gas
Onshore wind
Solar thermal
Geothermal

Jam tomorrow technologies - post 2010

Biodiesel
Bioethanol
Biogas
Energy storage
Offshore wind

Jam the day after tomorrow technologies - post 2025

Fuel cells
Solar PV
Wave

France's Theolia has just bought out Natenco GmbH, a major private European wind energy developer and operator, which is based in Germany.

The deal for Theolia is thought to be that;

Theolia and Natenco offer complementary business models. Theolia’s model focuses on development, construction, and operation of wind parks for its own account. Natenco undertakes similar activities but principally for third parties.

Plus, Nantenco has a healthy looking set of accounts.

Meanwhile, France has a target of 13,500 MW of wind turbines by 2010. Massive growth then, considering they only had 390 MW at the beginning of 2005. I'm not all that sure that this is achievable. So it's quite shrewd for Theolia to diversify out of France, just in case the opportunities aren't quite what the optimists say they are.

You need a lot of bucks to be in the solar business and you need plenty to buy it. So perhaps it shouldn't be such a surprise that Switzerland has its only niche solar industry.

3 S Swiss Solar Systems I would argue is at the right part of the production chain for a high cost country - the intellectual capital heavy part - producing solar production lines and the associated special machinery for the photovoltaic industry.

Suzlon Energy has just closed a deal through it's Danish unit in Brazil.

The contract is for 225 megawatts of wind turbines with a Brazilian firm, SIIF Energies do Brasil (SIIF) to be supplied in first quarter of FY07.

I like the globalisation backdrop to this . . . an Indian wind turbine manufacturer, selling through it's Danish subisidiary to Brazil. Brazil is like India because it has had such massive unrealised potential for so long. For both countries, this potential is only now starting to shine through.

A board member of Aleo Solar AG has just claimed that "The current shift from a seller’s to a buyer’s market allows us to turn down quotes from solar cell manufacturers that are clearly too expensive even at short notice."

This is the first I have heard of a buyer's market opening up in solar cells. I've blogged quite a lot about silicon being a seller's market and assumed that solar cells (made from silicon) and are then used to make solar modules as being in the same category.

Maybe we are just starting to see the start of a silcon glut heralding lower solar prices?

Nordex has signed a framework agreement for the supply of 30 wind turbines from the Nordex N90 series.

These are 2.3 and 2.5 MW models. A few years ago, it was assumed that wind turbines would continually grow in size. By now - wind turbines were only meant to be 5 MW and maybe even bigger. This clearly hasn't happened. There is still no mass production of giant 5 MW plus turbines. Most wind farm developers are sticking to tried and tested 2 - 3 megawatt models.

The world's largest commercially available model is a 5 MW made by RePower Systems AG.

Ballard Power Systems (TSX:BLD) announced Tuesday it will supply 2,900 of its Mark 9 SSL fuel cells to General Hydrogen Corp. by the end of 2008 under a US$22-million agreement.

The market liked the news and the stock closed up over 8% at 6.1. Actually, Ballard could do with quite a lot of good news - just take a look at the 12 month chart. It looks more like a seismograph with an earthquake in the middle. This is when it peaked at just over 12 before May's alternative energy fallout.

I know that some people out there view the industrialisation of China with absolute horror. They forecast that this will tip the world into an environmental abyss and we will all die, etc.

What nonsense.

Ultimately, China is the solution, not the problem. Chinese enterprise and manufacturing will do a great deal to bring down costs of alternative energy technologies, as it is already.

So I was quite cheered today to read about how the Chairman of Suntech Power Holdings,
Shi Zhengrong, a maker of photovoltaic cells for solar panels is now the 5th richest man in China. Good for him. After all, who could humanely wish for a world where the Chinese stay forever poor?

A very good piece here in Forbes magazine about the ethanol rush and how it ain't what it used to be. I've appended a couple of paragraphs below which concisely put the for and against case;

"Despite the clamor to prop up gas prices, ethanol investors like to boast that the corn-based fuel would be profitable at $35 oil--even absent the subsidies they benefit from. It’s hard to judge how ethanol would fare against gas under various market conditions because ethanol demand is currently being driven by the federal mandate and the phase-out of the gasoline additive MTBE, which refiners have scurried to replace with the corn-based fuel.

But rosy predictions of ethanol's viability often ignore the volatility in the price of corn and natural gas, which fuels most ethanol plants. In fact, it's not far-fetched to imagine a perfect storm in which low-priced oil coincides with climbing natural gas prices just as a drought hits the Midwest, ravaging the corn crop".
The figures on what becomes economically viable at what oil price incidentally are not universally agreed upon. I was just re-reading a report on the oil industry published by The Economist magazine (April 22nd 2006, page 82) and they used these figures from Cambridge Energy Research Associates and their own data sources;

$80 - Biodiesel
$64 - US corn-based ethanol
$50 - Shale oil
$40 - Tar sands; Brazilian can-based ethanol; gas-to-liquids ; coal-to-liquids
$20 - Conventional oil

Satcon Technology Corp is having a rough time of it on the Nasdaq.

The company has requested a hearing because its market cap. had fallen below $50,000,000 for 10 consecutive business days as at August 30th. This means it has failed to comply with the continued listing requirements of The Nasdaq Global Market.

What a ridiculous, arbitrary rule. Why not 11 days and $49 m dollars?

And why have such a rule at all?

Whenever I see round numbers, I become immediately sceptical and suspicious of overly bureaucratic activity. No wonder smaller US companies are now seeking to list on AIM rather than the Nasdaq. I'm sure there are people out there who can argue otherwise, but I don't really see the benefit of this rule to aspiring companies or the Nasdaq.

Australian renewable fuels has just closed its first large volume sale - a 6 month contract for between 2 and 3 million litres of biodiesel per month.

Succeeding in alternative energy in Australia is not easy - of all the world's developed countries, it has the lowest energy costs by far. This is because of its vast coal resources that are very inexpensively extracted. So it makes sense that the one area - transport fuel - where they produce less oil than they consume (55%), is the major opportunity for alternative energy.

In biofuels, feedstock costs trump almost everything. So it's interesting that arfuels (as they like to be known) has chosen to use processed tallow and used cooking oil, i.e. waste vegetable oils. I suspect that this may be because in Oz, the usual types of virgin oil crop feedstock (rapeseed, soya bean, palm, jatropha etc.) just wouldn't grow in the climate.

These last few weeks of falling oil prices have not been a great time to put the case for biofuels. And so, you wonder a little at whoever advised BDI Biodiesel (advfn page going up shortly) to go public on September 25th.

BDI Biodiesel had set its IPO price at EUR58 a share and right now its around 55. Hardly a success, or at least not yet. As I have commented earlier in this blog, it looks like oil has found a new trading range $60 - $80. And when in the last week oil fell below $60, it quickly recovered. Should it go north of $70 again soon, many biofuel (and solar) stocks might well rediscover their popularity.

Iberdrola, Spain’s second-largest power company will direct a third of investment into wind-power projects through 2009, chairman Ignacio Sanchez Galan told investors at a meeting yesterday in Madrid. Reading between the figures, this amounts to potentially as much as EUR 4 Billion.

Using our advfn data, you will see that the stock is up over 50% on 12 months ago. So it's worth noting that JP Morgan are now calling it a take-profits stock.

Ballard is still attracting investors.

Specifically, a US$5.85 million equity investment from EBARA Corporation (EBARA). In exchange for the US$5.85 million investment by EBARA, Ballard issued 1,022,549 Ballard Common shares.

I just have my doubts about fuel cells in cars anytime soon. The mid-future however suggests that it will be in buses first in metropolitan areas where they might make their breakthrough.

Green Plains Renewable Energy today announced a new CFO and the market is responding postively - currently trading up over 2% at 21.5 (see our time-delayed prices here).

According to the press release, the new CFO, Brian L. Larson "will be responsible for cash control and management and building and managing the accounting team. He will assist in raising capital and managing debt agreements, and will providing strategic planning to grow the Company through expansion of current plants under construction, the construction of additional new plants and will also assist the Company in locating and evaluating potential acquisitions. Further, Mr. Larson will assist the Company in its Sarbanes-Oxley and Securities and Exchange Commission compliance."

This man is going to have his hands full. But actually, it's the last bit that most interests me. "Investor relations" didn't exist a few years ago. Then a tab for it started appearing on the websites of all listed companies and now whole departments have been created to deal with investors. The Sarbanes-Oxley Act has made regulatory compliance so costly that this bureaucracy seems only likely to grow. No wonder it is now a major part of any new CFO's portfolio.

Fact: Germany has 18,400 MW of windpower and is finding it very hard to expand onshore. They've got two problems;

i) the subsidy is too high - raising the overall cost of wind to the end consumer
ii) it is not a windy country - load factors are in the teens - most investors wouldn't touch anything below 25%
iii) offshore is still in its infancy and much more expensive

So where to go next?

The answer it seems is Poland.

Interested companies that are listed AEI stocks include the Spanish stock Gamesa.

Europe's wind boom is changing location from West to East. Other than Poland, I also think that there's plenty of scope for going somewhere like Albania or Ukraine, where planning permission I suspect would be a lot less hard to come by.

News that Evergreen Solar has just signed a contract with Norway's Renewable Energy Corp for the supply of 7,400 metric tons of granular polysilicon over seven years beginning in 2008 is very promising.

It is this kind of long-term contract that has shielded the mighty semiconductor industry from the great silicon bull market. Maybe now we will start to see some stabilising prices and that will be a huge step forward for the solar industry.