There’s nothing like a solid analyst’s upgrade to boost a stock’s share price, and that is what’s happening today with solar stocks.

Vishal Shah of Barclays Capital has upgraded solar stocks Suntech (STP), SunPower (SPWRA) and JA Solar (JASO) from “Equal Weight” to “Overweight.” These shares are all advancing by about 9-10% and pulling the whole sector up with them. Yingli Green Energy (YGE) is up nearly 4%, Solarfun (SOLF) is up about 4.5% and First Solar (FSLR) is up nearly 3.5%.

The upgrade is based on an increase in forecast demand by 2 GW and improved pricing. Shah expects German demand to remain positive next year and changes in feed-in tariff programs to boost second half results. He also thinks the effects of governmental economic stimulus programs in the U.S. and China to contribute to the rise in value of the solar companies.

For the past 12 months, solar shares are all over the place. Suntech shares are up more than 50%, and JA Solar shares are up more than 30%. SunPower shares are down more than 30%, and First Solar shares are down slightly. Yingli shares are up about 200% and are within reach of a new 52-week high.

The solar market is growing, especially in Europe. But do the market’s long-term prospects support this optimism? Back on this side of the Atlantic, Progress Energy (PGN) announced last week that it would close 11 coal-fired power plants in North Carolina, which generate 1,500 megawatts of electricity.

The company is doing this rather than installing scrubbing equipment. Progress will replace at least one of the plants with a natural-gas fired plant. That’s unusual because gas-fired power plants typically don’t replace baseload plants but are built instead to meet peak demand.

But natural gas is cheap in the U.S. — much cheaper than in Europe. And more gas is being discovered and pumped all the time. As long as natural gas prices remain low, and as long as there’s a possibility of some kind of carbon price being set, it’s smart for a power generator to look at replacing dirty coal plants with cleaner natural gas plants.

Will Natural Gas Replace Coal?

But that will never solve the demand for energy, especially if electric cars gain a decent-sized share of the market. That much larger demand for electricity cannot be met by clean natural gas. The choice will be between coal and nuclear energy. Neither solar nor wind could meet the demand.

Solar power could be nothing more than a repeat of the rise and demise of ethanol. Right now it’s still rising, but that could easily change.