Shredding on acoustic can certainly be done (Hell, I saw Yngnie do it), but it's far from easy. Guitarists like Al De Meola, Paco DeLucia, and McLaughlin are basically acoustic shredders (since speedy flamenco styles closely parallel shredding techniques used by electric guitarists). I can't really help you with acoustic shredding, except to say that having a GOOD quality acoustic guitar will make a huge difference in your playing. If your acoustic has bad action, you won't be going very fast at all. Ovation and other high-quality acoustics are something to look into, especially if you want to emulate flamenco styles.

If you're just talking about shredding in general, I've gotten extremely fast at alternate picking. It's all in the wrist. Just practice alternate picking various scales (and NOT pentatonic...way too cliche) along to a metronome. Gradually increase your speed. It takes time, but it's not rocket-science.