Stocks in companies with interests in alternative energy sources breezed into the new year, with investors particularly excited by the prospects for solar power.

Credit: SOURCE.ECO

The WilderHill Clean Energy Index (ECO on the American Stock Exchange) moved forward on the back of news about successful share offerings in a couple of solar-panel companies. The sector is also benefiting from a general sense that the uncertainty about oil and gas supplies that dogged major nations in 2005 won't dissipate any time soon — leaving people more positive about energy sources that were once considered to be on the fringe.

“Solar stocks are taking off,” says Robert Wilder, whose company, WilderShares in Encinitas, California, maintains the ECO index. An initial public offering (IPO) for SunPower, a solar-panel maker spun off by California-based Cypress Semiconductor in November, raised $139 million. Then last month, an IPO for China's Suntech Power netted $455 million — not bad at a time when many young companies are struggling to get initial public offerings off the ground. “Solar-panel companies are growing at 30–40% each year, and they are typically selling everything they can produce,” Wilder says.

But it's not all rosy for alternative-energy suppliers. Companies working with hydrogen or fuel cells “continue to disappoint”, Wilder says. Many of the smaller ones, he adds, are now “running out of money”.

This week, WilderHill and London-based New Energy Finance will launch a new market index tracking more non-US companies than ECO, reflecting the strength of demand for energy from renewable sources in Europe and Asia.