Clean-energy stocks have soared since early March on the back of a general market upturn and continued market buzz about alternative energy sources. But analysts warn that the optimism is becoming excessive.

The WilderHill New Energy Global Innovation Index (symbol NEX on the American Stock Exchange), which measures stocks in companies with interests in energy sources other than fossil fuels or nuclear power, hit its highest-ever level as investors poured money into the fashionable sector.

Michael Liebreich, chief executive of London-based New Energy Finance, which compiles the index jointly with WilderShares of California, says that generally buoyant sentiment is behind the index's upward march.

“There has been almost no bad news for clean energy,” he says. “Sentiment is basically running away with itself and it is due for a correction. At some point in the next 12 months, there will be one.”

The point is reinforced by a report on 'clean technology' issued this week by New York-based Lux Research. “The warning signs of a bubble are appearing in the energy segment,” the report says.

Liebreich notes that the positive sentiment is being driven by strategic events such as Californian legislation last September, which has set ambitious long-term targets for carbon emissions (down 80% from 1990 levels by 2050), and Norway's 19 April pledge to go 'carbon neutral'. “It's a small country but a big step,” he says of Norway's plans.

The stand-out divisions of the clean-energy sector are wind and solar power. However Liebreich notes that some solar-energy companies, desperate to secure supplies of silicon ingots or wafers, have locked themselves into expensive, long-term contracts that will come back to bite them later on, as new supplies come on stream and prices of these commodities fall.