Germany's solar companies are starting to move out of Germany. Solon AG fuer Solartechnik (SOO1 GY) gained 1.8 euros, or 6.4 percent, to 29.8 euros on news of their plan to buy up to 20 percent in Australia's CBD Energy Ltd. This would cost as much as 3 million euros and Solon's aim is to co-operate with CBD Energy as a turn-key contractor in implementing CO2-free power plant projects in Australia.

All alternative energy in Australia faces one enormous hurdle - the world's cheapest coal. So even though solar has great natural advantages in Oz it will need support still to succeed - just like most other countries.

Much troubled thin-film BIPV manufacturer Solar Integrated had a great day yesterday thanks to news that it has won a deal worth 13 mln usd with Tesco USA to provide a 2 MW building integrated photovoltaic (BIPV) roofing system for Tesco USA's distribution centre under construction in Riverside, California. R Randall MacEwen, Solar Integrated's president and chief executive believes it will be the largest roof-mounted solar installation in the world.

The company though is still down 82% on where it was 12 months ago and was - by a margin - the worst performing AEI stock of 2006 a -82.71% drop in value, year-end to year-end. See my post from the middle of last year about what caused this.

Ascent Solar, a thin-film pv solar company, today rose 4.49% on a "transfer of contracts" from I.T.N. energy systems. A transfer of contracts by the way is also called a "novation" which is a legal term for transferring rights and obligations in a given contract over to another party. What's interesting here is that this novation has given Ascent Solar $3.5 m in government funding and research contracts.

This is a small company with big plans. This year they aspire to launch their 1.5 MW thin-film plant (tiny!) which they hope to rapidly upscale to 100 MW by 2010. The company's target is to reach 5 cents a kilowatt hour from the current 20 cents a kilowatt hour with its building intergrated photvoltaics (BIPV).

What makes this solar company different is;

i) they see an application for their technology in space, near space as well as commercial and residential BIPV applications
ii) they use copper-indium-gallium-diselenide (CIGS) instead of amorphous silicon
iii) they produce the CIGS cells on high-temperature plastic substrate. These plastics - they claim - can survive the manufacturing temperatures associated with thin-film CIGS processing while remaining flexible and electrically insulating

Well, my view is, good luck to them. But the road to low cost solar power is long and littered with roadkill. The thin-film solar is still under 5% of world solar demand - principally in Germany where I suspect thin film makes an even lower impact. BIPV companies who believed that a continous manufacturing run would bring down solar costs and maximize demand have been disappointing e.g. Solar Intergrated Technologies. Despite record silicon prices that ought to shift demand to to flexible low or non-silicon solar, the demand has yet to appear. Will Ascent Solar really be different?

Let's see.

Trina Solar, one of a handful of Chinese stocks that have recently IPO'ed, appears to be stabilizing at a price just below $20 and a market cap. of about $100 million. Concerns were raised a few weeks ago that the IPO of Trina although moderately successful, may have been overpriced. The worry is that over the next couple of years, the smaller solar players will run into margin woes and silicon shortages much faster than the bigger players. This will consequently hamper their ability to compete. So all eyes will be on Trina's Q4 results due out shorty to see how well they are performing.

Since going public in July last year, Aleo Solar underwent a big price slide until early November and has been recovering ever since. So news that they have EUR 35m of orders already in place for 2007 has to be good. Unlike certain German solar firms, this one is also expanding into foreign markets - like California for sales to Powerlight - add to that their newly opened 10 MW plant in Barcelona, Spain and you have a smallish German solar company keen to grow outside of the home market.

It still has a way to go though to catch up with its IPO price.

Conergy AG, today issued a profit warning and dropped over 8%. Last month Conergy received a massive subsidy of EUR 76 million - or as they call it, funding. This would then lead to another subsidy from the German Federal State of Brandenburg.

From a pure economics perspective, I have very little confidence in Germany's solar boom. It's just that;

i) it is so government subsidy dependant
ii) Their solar firms appear quite unable to replicate their success outside of Germany
iii) Costs to the consumer are not falling post the introduction of the subsidy - a basis for its justification

Investors meanwhile are chasing a subsidy-driven industry of returns ultimately underwritten by government, rather than productivity.

One day - and I don't know when - these musical subsidies will stop. And Germany's solar industry will collapse as fast as alternative energy firms did following the demise of President Carter in the USA.

http://www.theautochannel.com/news/2007/01/09/033496.html