I don't think anyone saw this coming. Because of tax and regulatory incentives, it has always been difficult to find a totally straightforward relationship between the price of oil and alternative energy stocks. Yet no one ever really disputed that, say, if oil prices had remained low - at $10 a barrel as they were in 1999 - there's no way we could have had the boom in alternative energy investment of recent years.

However, over the last few weeks, they have clearly been heading in the opposite direction. Oil is reaching new highs - $111 and the Wilder Hill Clean Energy Index which closed at 206.77 yesterday, is a long way off it's 2007 Boxing Day high of 297.05.

Obviously, there are a lot of investors out there who haven't read the script !

What's happening is that commodities like oil and gold, in the face of the credit crunch, have become the new defensive investments. That strikes me as pretty risky, but it seems to be working for those investors, for now.

And still there is no let up in sight to the alternative energy boom. Figures out earlier this week from Clean Edge make this clear - in 2007, a 40% increase in revenue growth for solar photovoltaics, wind, biofuels, and fuel cells to $77.3 billion. And the projections for 2017 are;

• Biofuels sales will grow to $81.1 billion by 2017 - a 319% increase
  


• Wind power (new installation capital costs) will grow to $83.4 billion in 2017 - a 277% increase
  


• Solar photovoltaics (including modules, system components, and installation) will grow to $74 billion by 2017 - a 365% increase
  


• The fuel cell and distributed hydrogen market will grow to $16 billion over the next decade - a 1066% increase
  

All projections far into the future have a habit of being wrong of course, but Clean Edge has the only annual and projected figures in town. And let's be honest, most of us would be very happy with half these growth rates. It's also worth noting that in the last few years, alt. e. growth rates have actually been faster than anticipated. If there's anything I'm overtly sceptical about in these projections, it would have to be the fuel cell industry which has been the future for a long time. I still don't see a big breakthrough in sight.

It would be interesting to start seeing some figures though on the growth in energy storage technologies, particularly those in the category of hybrid electric vehicles.

A very informative piece here on alternative energy in Greece,  by Thrasy Petropoulos in Spero News.

I was staggered to learn that windfarm applications in Greece amount to an enormous 34,000 MW - almost 3 times the installed total capacity of existing electricity capacity - some 12,500 MW - of Europe's oldest nation. Obviously, they're not going to get that far - developers must be factoring in a high failure rate in planning applications, although getting past the bureaucrats has apparently got easier;  36 permits used to be required to site and connect a wind park, now it's only 9.

One of our wind stocks by the way, is Greek - C. Rokas SA.

A similar story with solar power - the existing target / project for 600MW, including 100MW on Crete is 6 times oversubscribed. I was recently in Athens and was struck by how many solar thermal units I saw on roofs. I was more struck though by the apparent wealth that did not exist there until recently. The economy was last recorded as growing at a very healthy 3.8% per annum (annualised Q3 2007) and Greece has become a kind of gateway to the Balkans for foreign investors.

A fast-growing, energy hungry economy makes the shift to alternative energy a lot easier. Given all of these, Greece deserves much more attention.

Canada, Montreal, 23rd January:

Hydro-Québec, a Québec state-owned electricity utility, is tendering for new wind farms and Repower Systems AG wants a big part of the pie.

According to the Gazette, ". . . among the scores of companies - Canadian and international - that participated in Hydro-Québec's current call for tender of 2,000 megawatts of wind power was REpower Systems, a German-based giant that has yet to make its mark in Canada".

and . . .

"Interest in the Quebec tender is intense. More than 25 developers proffered 66 bids for wind farms in proposals totalling more than 7,700 megawatts, or almost four times the amount that Hydro-Québec is seeking to add to its network. The new wind farms are expected to generate about $4 billion of investment".

If you're a West European wind turbine manufacturer, expanding in Canada makes a lot of sense. Deep down, I suspect many of them believe that the onshore West European wind boom, although not over, has its best years behind it. The other fastest growing markets over the next decade have to be the USA, South America and of course, Asia. Even the announcement yesterday ago by the European Union of even more ambitious - and less deliverable - renewables targets can't really change this.

A couple of days ago, the UK government announced to great fanfare that the UK would aim to build a staggering 33 GW of offshore wind by 2020. Governments have a habit of thinking they can make a statement of intent and it will happen. Well don't hold your breath !

Picture: Barrow Offshore Wind Farm in the Irish Sea

I don't like to get into politics on this website, less still opine on them. Investors should be above all that. But in a detached way, you can't ignore the shift (and the opportunity) that will occur in Australian alternative energy policy, assuming Kevin Rudd wins the Australian General Election tomorrow - not entirely certain.

This is what he said in his final plea to voters in a newspaper today;

"Labor will immediately ratify the Kyoto Protocol and establish Australia’s first national emissions trading scheme to provide the framework to meet a carbon target of reducing our greenhouse gas emissions by 60 per cent on 2000 levels by 2050. We will implement a renewable energy target of 20 per cent by 2020. Our $500 million renewable energy fund will help develop and commercialise solar, wind, geothermal and wave power projects, in addition to our $500 million national clean coal fund. We will set up a desalination and urban water recycling fund".

Considering that Australia, a fast-growing developed economy, generates roughly 9% of it's electricity - mostly hydro - from renewables, this target will be tough going. The headline story here though will probably be the Kyoto Protocol and the impact Oz will have on carbon trading.

For an overview of what's happening in the California Solar Market, take a look at this article.

California is home to quite a few listed solar companies, like Solar Integrated. So the recent legislative approval of SB1 is very important - listen to this podcast interview with Senator Murray . Solar PV - at least for now - remains very expensive which is why it is so tied up with supportive legislation and politics. So the legislative backdrop to the solar market in any country is a very key consideration.

I always wonder about the motives of those who describe President Bush as in the hands of Big Oil. If only because his legislative record vis a vis renewable energy is highly supportive. This started when he was Governor of Texas, whose renewables programme is growing at a tremendous pace - thanks in no small measure to the Renewables Portfolio Standard he signed into action in 1998.

So the news that the Solar America Initiative will have increased annual funding from $80 m to $148 m comes as no great surprise.

The Solar America Initiative (SAI) is a broad national program designed to encourage competition throughout the solar industry by lowering the cost of photovoltaic units and fostering innovation of new technologies. These are worthy aims. The more pertinent question is then not about Bush. But is this an efficient way of using public funds?

Today's much heralded Energy Review in the UK, appears to have been a bit overshadowed by the debate over nuclear.

The important point is that there is a long-term commitment to 2020 to reach 20% renewables in electricity generation. Considering that according to the last official figures for 2004, windpower contributed only 0.54% to UK electricity, expect high compound growth rates for years to come to get anywhere near that figure.

Duriing an interview on BBC News 24 TV in mid-afternoon, I said that we need to talk much more about the economics of energy costs. Most of the news coverage I thought gave far too much prominence to lobbyists and politicians. When it is taxpayers, consumers and investors who will have to foot the bill.

What is welcome will be the easing of planning restrictions. As I have mentioned here before, they are the single greatest obstacle to the takeup of windpower in the UK.

London's Stock Exchange recently announced a Capital Markets Day for the Renewable Sector set for October 13th.

Those companies in the sector - listed or planning to do so- will have the opportunity to meet a number of small-cap funds who want to know more about them.

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.