Green Wombat

Solar panel maker First Solar’s Google-like stock price – shares soared 34 percent Thursday to close at $224.43 – is either a sign that green tech is getting bubbly or that investors genuinely see a huge potential market in renewable energy.

Probably a bit of both. The Phoenix-based company makes thin-film solar modules for use in solar power plants or in rooftop arrays for commercial buildings. While thin-film offers lower efficiency than traditional silicon-based solar modules, it can be produced cheaper, and First Solar (FSLR) has been rapidly ramping up production. The trigger for today’s investor love was First Solar’s third-quarter earnings report on Wednesday that showed revenue spiked 106 percent to $159 million from the previous quarter and up a whopping 290 percent from a year ago. First Solar — fun fact: it’s biggest shareholder is the estate of Wal-Mart (WMT) heir John T. Walton — also upped its 2007 revenue forecast to $480 million to $485 million from an earlier estimate of $400 million to $415 million. The stock fell back to $206.85 at the close of trading Friday.

Investors have been prepped by recent announcements from First Solar that the company would double its manufacturing capacity by the end of 2009 and that it had signed new deals with customers. Much of First Solar’s production goes to solar companies in Germany, where generous government subsidies have made the country a solar hotbed. First Solar also is benefiting from being one of the first new-generation thin-film solar companies to market. A host of thin-film startups like Nanosolar and HelioVolt – they also minimize the use of expensive silicon but utilize a different technology – have scored hundreds of millions of dollars in funding from venture capitalists but have yet to produce products.

Savvy investors also know that the U.S. market is poised to take off, particularly for utility-scale solar projects. Half the states have now imposed so-called renewable portfolio standards that require varying percentages of utilities’ electricity be obtained from greenhouse-gas free sources. In California, for instance, in addition to the state’s global warming law that will cap greenhouse gas emissions, portfolio standards oblige utilities like PG&E (PCG), Southern California Edision (EIX) and San Diego Gas & Electric (SRE) get 20 percent of their power from renewable sources by 2010 and a third by 2020. They’re going to need a lot of solar power plants to meet that mandate.

That explains why other solar module makers have experienced a similar run-up in their stock. For instance, SunPower (SPWR), which makes solar panels used in residential and commercial arrays as well as in photovoltaic power plants, has seen its shares spike 81 percent over the past three months to close at $141.93 on Thursday. That’s a 322 percent premium over what the stock was trading a year ago.