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.

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.

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.

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.

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.

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.