America is reaching the end of the summer driving season, usually a signal for a fall in gas or petrol prices. For America's nascent ethanol industry, this price fall is being compounded by several other factors.

As this article in the Chicago Tribune makes clear, the woes of the ethanol industry are also being compounded by;

i) Higher corn costs - due to the competition for food or fuel from a limited feedstock
ii) Higher plant construction costs - a 10% increase from $2.20 a gallon, up from about $2 a gallon
iii) Looming oversupply - There are currently 128 ethanol plants in the U.S. Seventy-seven plants are under construction and eight are expanding

We have seen these problems translate into much worse results for bioethanol stocks.

Take VeraSun Energy Corp., America's third-largest ethanol producer by capacity, blaming higher corn costs, the company reported earlier this month that Q2 profit fell 23 percent. And then there's Aventine Renewable Energy Holdings Inc. whose profit fell a massive 49 percent.

Actually, I rather doubt that this will go on and on. Apart from which, falling ethanol prices - which benefit the consumer rather than the producer - has to be a good thing. So keep a close eye on the ethanol price, either once a week through my newsletter (just sign up on the top right-hand corner of this page), or more often here.

I don't know why this hasn't got more press. Theolia, France's leading wind company, is sponsoring quite the strangest looking alternative energy powered vehicle in years, to cross the Atlantic, albeit the sunniest route, from Senegal to Martinique. Windream One has to be seen to be believed;

In fact, there's even a short movie of it here.

There are certain characteristics that make this solar-powered blimp highly unique;

i) A tri-lobe delta shape - meaning it can carry a propulsion engine at the tail, as well as the sides
ii) A keel that can be lowered to the sea, called a "chien de mer", to steer the dirigible when the wind is blowing in a favourable direction
iii) A paltry 2 kilowatt engine that will carry two people, food and supplies for 8-10 days

It's the second point, that I find particularly unusual, just look at it . . .

You almost wonder if the wind-powered component was insisted upon by Theolia !

The solar electric cruising mode will give a speed of 20 km per hour and when "sailing", a very respectable 20 knots. This will not be a very comfortable journey - there really isn't much room - and I can't see that there will be much to do either. My guess is that they'll be using that GPS phone an awful lot to stave off the boredom !

A very interesting piece here by J. Peter Lynch - Solar Stocks plummet on market turmoil - (not THE Peter Lynch of Fidelity). J. Peter believes that solar stocks were ". . . over bought at the time the market woke up to the potential problems in the sub-prime and other credit markets. The combination of a rapidly falling market and an over extended solar market sector was not a pretty sight."

Meanwhile, China Sunergy, has just posted a Q2 loss, with one analyst citing the global supply crunch of polysilicon as the main cause for the loss of $3.8 million, or 14 cents per ADS, after paying dividends to preferential stock holders.

A quick glance at the solar universe, suggests that solar stocks listed outside of America - the other 60% - are holding up pretty well. Europe's solar cheerleader, Renewable Energy Corp, can point to second-quarter profits ahead of expectations at both the pretax and operating levels.

Canada is a nation blessed with no end of natural resources - both hydrocarbon and renewable. A brief look at the Toronto Stock Exchange has always shown a multitude of mining companies and increasingly, today, alternative energy companies.

But this article "Rough summer for alternative energy stocks" reminds us that not even the best of alternative energy companies are immune to the current market turmoil. Xantrex, is one of Canada's top alt e stocks and they too are struggling, at least on a stock price basis.

I'm not convinced that the correction that is going on worldwide will last much more than a few months. And the drivers for alternative energy; rising global energy demand, environmental concerns, high hydrocarbon prices and volatility and energy security, are not going away any time soon. Some would argue that they may even have only just got started . . .

Vestas, the world's biggest wind turbine manufacturer from Denmark, has just announced that it will be closing its last manufacturing plant in Portland, Australia "because the green market there is unviable". This comes after the Danish-based company last year closed a similar $15 million factory in Tasmania, laying off 65 staff.

You'd think that Australia was the perfect place for wind power - a massive continent with just 20 million people to go around, who could object to the odd windfarm?

These charts taken from the Australian Wind Energy Association website tell the story.

Although cumulatively rising fast, 2006 was a slow year for installation. The other point is Australia has some of the lowest electricity prices in the world and electricity consumption is growing at a staggering 3.2% per annum - amazing for a developed country.

In the medium term it seems that price competitiveness and fast-rising electricity demand, means wind will struggle to make a dent for some time in Australia.

Increasingly of late, I keep reading about nanotechnology being the key to solar power's breakthrough. A good place to follow this sort of story by the way is here - a website dedicated to news about nanotech with a sizeable section on solar nanotechnology.

I know there is a constituency out there that believes that solar is some kind of miracle energy source just around the corner. There has indeed been a feverish following of nanotechnology since the publication of Eric Drexler's 1986 book "Engines of Creation - the Coming Era of Nanotechnology". Sorry to spoil the party, but there are however a few hard facts that can't be ignored;

i) Today, solar photovoltaic power delivers a load factor of 10% in countries like Germany that can afford it.
ii) That's because there is no solar power at night and actually very little during cloudy days and winters in Europe
iii) It's a great mistake to concentrate on the manufacturing production cost per watt of this or that solar technology. In the long run, all that matters is the installed cost per watt and that remains high - $6 - $9 per watt.
iv) If you had the technology to produce solar power at a quarter of the cost of everyone else, would you sell it at that price too?
v) Solar power will not make the massive breakthrough until it reaches an installed cost of $1 - $2 per watt. Don't bet on that happening any time soon.

In that vein, I have just started leafing through my well-worn copy of Ray Kurzweil's "The Singularity is Near" again. A wonderfully optimistic book from a brilliant futurist who has a record of getting most things right. Yet looking at it again, I'm reminded that the world is full of broken promises about falling costs in solar power. On page 250 of the book, he quoted Martin Roscheisen of Nanosolar, who " . . . estimates that his technology has the potential to bring down solar-power costs to around fifty cents per watt by 2006, lower than that of natural gas. Competitors Nanosys and Konarka have similar projections."

Well, needless to say, this hasn't happened. I tend to think there is far more potential in the medium term for Concentrated Solar Power (mirrors heating up molten salts in deserts), an off the shelf cheaper technology that works and delivers industrial quantities of power, especially in what the Economist recently labelled the Dark Continent - because at night, unlike other developed continents, almost the whole of Africa remains dark, unlit by electricity.

Are the days of the mighty greenback dominating the investment horizon coming to a close?

It's inevitable that the world's fast growing Sovereign Wealth Funds, usually funded by petrodollars or manufacturing export dollar earnings, will have to diversify their currency exposure out of dollars.

Arguably, that's partly why globally there is a bit of sustained dollar sell-off going on - the world has been overweight dollars - faute de mieux - for a long time. Yet more worryingly, China is saying not too subtly that it may start to unload it's vast holding off US Treasuries, massively increasing the cost of American debt, which will quickly make the current sub-prime debt mini-crisis look like a Soccer Mom's tea-party.

But why am I posting about this?

The currency exposure of diversified alternative energy investments will start to loom larger and larger in the investor's mind. If you believe, as I do, that alternative energy is an emerging global asset class, then one has to think hard about future currency performance. And a great many of the stocks listed on this site are not quoted in America and are not priced in dollars. So hedging the currency risk with a more diversified portfolio is for this sector, very much an option.

According to a report by NanoMarkets - which you probably won't buy because it costs 1000s of dollars - the forecast rate of growth for thin film is way faster than that of the PV industry as a whole (put at 30 - 40% per annum, depending on who you believe). The world thin-film photovoltaics (TFPV) market is forecast to reach $7.2 billion by 2015 up from $1 billion today. A seven fold increase in 7 or so years is pretty amazing.

So after taking another look at our list of solar stocks here, I thought it would be helpful to list out separately, those solar players engaged in the business of thin film pv;

The Thin Film Solar PV Players

1. Daystar Technologies
2. Energy Conversion Devices
3. First Solar
4. PowerFilm Solar
5. Solar Integrated Technologies

What stands out to any solar industry observer, is that none of these companies are from Germany, or very involved in it - unusual, considering Germany is the mainstay of the global solar market. They also have next to no exposure to Chinese manufacturing, the solar low-cost manufacturing route.

That's because thin film is a very high tech bet on a high tech industry. And Energy Conversion Devices, notably, failed to convert the technology into sales a few years ago. Now there are new players, including the unlisted Nanosolar which has the added PR benefit of investment by google founders.

In another 3 years, I think we'll be able to see better how this all pans out and whether thin film will still be the future or as good as they say it is. It's just that at about this point, many observers are anticipating a possible fall in silicon prices, negating the need for lower efficiency, although less costly thin film in the first place . . . ?

IdaTech Plc, (since when did it become a great branding idea to place capital letters in the middle of company names?) successfully floated on London's AIM a couple off days ago. The company is currently priced above it's IPO price - pretty good considering current market conditions and that this industry is far from flavour of the month. Investors have after all, lost lots of money in fuel cells over the years.

IdaTech, founded in 1996, was acquired by IDACORP in 1999. IDACORP latterly sold IdaTech to Investec in 2006, since when there has been a steady deal flow and series of press releases. Investec, incidentally, even use IdaTech's fuel cells as backup in their HQ.

IdaTech's major USP has to be its use of methanol mixed with water as a hydrogen fuel source for the reformer, engendering longer run times in emergency backup situations.

Still, for anyone who wants to read the sceptic's case against fuel cells, I highly recommend Joe Romm's Hype About Hydrogen, a book I've mentioned a few times here before.

China Biodiesel, in a disturbing echo of Biofuels Corporation's basic inability to deliver plant on schedule, has just announced that in the second half of 2007, turnover will be affected by the consequence of delays in building the extension to the plant in Longyan and the delay in completing the new plant in Xiamen.

I don't want to comment (because I don't know) about all the capital sources of China Biodiesel's expansion plans. But the big picture is that if we are moving into a global credit crunch, or at least a period of tighter money, one might want to take a hard look at all alternative energy companies that are engaging in an investment-led rather than organic expansion.

When credit is cheap, some companies are wont to invest and expand like crazy. Other companies are however more sanguine and take a longer view of the business cycle, choosing to expand out of profits. So which of these approaches works best?

Both and none of them - it's just that no strategy works continuously forever. The econosphere is a constantly evolving race without a finish, fuelled by the shifting sands of the capital markets. In other words, what works well today may not do so tomorrow and even lose money the day after.

And I have a sneaking suspicion that the progress in electrical transport just might in a few years, leave biofuels high and dry.

When starting this blog, I knew it would happen eventually; a listed alternative energy company would fail and have to be taken off the stockmarket and of course off AEI.

Tomorrow, Biofuels Corp will have its trading facility cancelled on the AIM market of the London Stock Exchange, effective from 07:00. Henceforth, the company will be trading under the name of Earls Nook Limited.

So here are my post-mortem thoughts on Biofuels Corp, which as you'll see from the 1 year chart, has lost a lot of money for its investors.

1. The company name was wrong - you can't brand yourself with a generic term, especially when their core business was biodiesel, a small part of the global biofuel industry. Imagine calling microsoft the software company.

2. I have severe doubts about companies going public without a business up and running in place already. Biofuels Corp was a development company. Couldn't they have seen a VC instead?

Venture Capitalists are active managers and owners, sometimes taking a seat on the board, in exchange for a sizeable chunk of equity, proffering valuable management advice and firing when need be. Fund Managers and retail investors who provide capital on the public market are manifestly not in this category. In reality, the IPO comes as the crowning glory, the final stage or the exit for a company, not as the seed capital.

3. The idea behind Biofuels Corp in principle was sound - Europe has high biofuel targets in place, and most of the contribution will probably be met by biodiesel as the relevant feedstock crops grow better there.

So au revoir Biofuels Corp - for AEI, you were the first, but you won't be the last to go . . .