KP Renewables, a stock with a capitalisation of just £15 m is a spin-off from Kwikpower International. Kwikpower is a biotechnology company formed in 1996 to develop or acquire and commercialize, innovative and cost effective technologies to produce clean burning alternative fuels or bio-based chemicals from waste.

KP Renewables meanwhile looks like the higher tech alternative energy company focussed on earning ROCs (Renewables Obligation Certificates) - and interested in wind, biomass, carbon recycling and direct waste disposal. It claims that its Framework PPAs (Power Purchase Agreements) and its project financing capabilities provide the company and the UK’s small renewable energy developers with a unique opportunity to overcome the barriers to entry presented by large power utility companies.

According to their most recent report (no press update since December '05), the company has 520 MW of forward sold power contracts. It's also interesting that they have listings on 3 German exchanges as well.

Germany clearly has a very hungry SRI market.

KP Renewables closed up today at 32.5p

As this lucid article in Slate describes the investment boom in alternative energy, which he describes as the Prius Bubble, is ". . . a process that has repeated itself throughout history—with the railroad and telegraph, for example—investment bubbles frequently kick-start new industries and leave behind innovations and commercial infrastructure that others can use.."

It was certainly true of the Telecoms industry, which almost invested itself out of business by laying fiberoptic cables all over the world, lowering the cost of conventional telecommunications irreversibly and pricing in new web-based telephony.

I'm not entirely convinced that you can apply this to existing alternative energy assets, but do quite agree that there is a known unknown - we don't know what technological breakthroughs are going to come out of this investment boom. The argument makes more sense if you look at alternative energy as a forward purchase at a fixed price - decades into the future with say a wind farm or solar panels. If you take the view that conventional energy prices are liable to rise faster than incomes for the next couple of decades - then it is quite possible that the typical payback period gets that much closer. Renewable energy prices can be fixed into the future of course, because the cost of the fuel - wind, sun, etc. - is free.

The Cabot Heritage Corporation has just issued a free report (give them some details and you get a 5 page pdf) of 7 alternative energy stocks for the decade ahead.

Those stocks listed are;

Sunpower , Evergreen Solar , MEMC Electronic Materials , Pacific Ethanol, Ballard Power, Medis Technologies and Cameco.

No surprises here except for Cameco - the world's largest low-cost uranium producer. You could say that uranium is an alternative fuel, because it is not a conventional fossil fuel. But nuclear power is one area AEI will not be covering.

This very interesting set of data lays out which US alternative energy stocks have outperformed and underperformed over quarter to date, year to date and over the last 52 weeks.

Here at AEI, we take a global perspective and carry news about stocks outside of the USA and we don't cover OTC stocks. So we won't be covering XSUNX - an OTC stock which was the top-performing in this grouping, with a return of over 400%.

What is clearly discernable is that it has been a tough quarter to date for many of these stocks. Most of the gains and outperformance were long prior to that. Still with Oil now touching $78 a barrel and expected to go higher, it's hard not to see more alternative energy technologies coming to market.

In a piece yesterday by John Wasik on Bloomberg, a cautious note is sounded about the boom in alternative energy.

He asks, are alternative energy stocks the next dot bomb?

And then suggests - amongst other options - of buying small cap index funds as a way to gain safe exposure. For some people, that may no doubt be true. Of course, every high performing industry in world history eventually reverts to the mean. Booms never do last forever.

But alternative energy is still relatively so small compared to conventional power, it's hard not to see substantial growth for some time to come. There are certain assumptions that you can make about rising environmental concerns, relative scarcity of fossil fuels and accelerating global economic growth pricing in 2 billion people from the developing world. It's also worth noting that these AEI investors are not necessarily only trying to make money - they are, at least in part, driven by SRI ethics and an intangible belief in the technology.

With oil touching $75 a barrel, I wouldn't write off alternative energy just yet.