Announced at market opening today, Solar Fabrik is doubling its annual production capacity to 30 MW due to a strategic purchase of wafer trader Global Expertise Wafer Division Ltd. (GEWD). By purchasing the Malaysian company, Solar-Fabrik AG is aiming to insure a supply of solar wafers exceeding 30 megawatt (MW) for 2006.

At the time of writing, the market responded favourably, pushing Solar Fabrik up by just under 10% to EUR 11.75.

Ensuring a supply of solar wafers is a big deal, because there is an enormous supply bottleneck. That's because the silicon wafer market has not kept pace with the demand for solar panels these last few years. Solar Module manufacturers used to be able to use the cast-offs from silicon chip manufacturing. However, in just a few years, chip manufacturing has become so efficient that there isn't much silicon left over. This plus compound growth of 30% a year in solar PV production has helped push up the price of high grade silicon from $9 per kilo to a forecast $60 this year.

So it's easy to see why companies like Solar-Fabrik are reaching back into the supply chain.

Figures out late last week show that for the first time in 2004, Germany outproduced Japan in solar panels, making it the no. 1 producer in the world.

Overall, Japan still has the most solar power, at over 1.13 Gigawatts compared to Germany's 0.79 gigawatts. So why is Germany growing so fast, 140% in 1 year?

A recent law has made it viable to start producing large scale solar plants in Germany, of 10s or even hundreds of kilowatts, many times larger than a conventional home setup. But beware of German politics. September's National Election offer a real chance that the ruling Green / SPD government under Schroeder will lose and the opposition are talking openly about reducing renewable subsidies.

That's why Germany's many listed solar companies like Solarworld AG, Conergy AG, Solar-Fabrik AG and others would prefer a Schroeder victory.

Nasdaq listed Spire Corporation is the world’s leading supplier of the manufacturing equipment and technology needed to manufacture solar photovoltaic power.

Just two days ago, they announced an order for four SPI-SUN SIMULATOR(TM) 350i photovoltaic module testers from First Solar, LLC of Perrysburg, Ohio. This promptly sent the stock to a new high of USD 13.37 on 20th July from opening below 7 just two days earlier.

Solar electric power is a very diverse market. Spire is at the start of the supply chain where there is arguably much less competition and higher profits compared to say retail suppliers and installers of solar module systems. Another listed company high up in the supply chain is Tokuyama, a major supplier of polycrystalline silicon feedstock.

Silicon prices have risen hugely over the last few years and to be engaged at the start of the silicon supply chain, looks like the right place to be.

United Solar Ovonic, fully owned by listed parent company Energy Conversion Devices, is doubling its production capacity to 60 MW to keep up with demand.

This matters because ECD is the largest producer of amorphous silicion in the world and it just got bigger.

What is amorphous silicion?

It is a type of ligher and flexible solar panelling which has a much wider range of application, typically in roofing as a membrane.

If climate drove the uptake in alternative energy, then Saudia Arabia would be the solar electric capital of the world. Several studies have shown that all of the world's electricity consumption could easily be met by solar panels in the Saudi Desert. But Saudi doesn't do that because local fossil fuels are even cheaper and that's my point. For alternative energy, just like most other industries, economics trump everything else, every time. Take Europe for example and how the solar thermal market plays out there . . .

In the latest survey by the European Solar Thermal Industry Association Germany and Austria outpace by far the hotter European Mediterranean Countries (apart from Greece) per capita in their domestic penetration of solar powered hot water. This is principally because they can afford it and perhaps more importantly, they believe in it.

So this is Europe's Solar Paradox. Don't think you'll find solar power in Europe most where the sun shines most. There may even a be a reverse correlation. And the same observation can be made right across the world.