Alternative energy is big business — and getting bigger. The industry includes hundreds of companies that make a piece of the continuously expanding jigsaw puzzle that is the alt energy space.
Rather than trying to pick winners and losers — which at this point is probably impossible — we’ve tried instead to identify the 25 companies we think will shape the alt energy industry for the next three to five years.

To make this determination, we’ve looked at a number of characteristics we think will play an important role in shaping the industry’s future. First, we chose companies we think are market leaders based on their market capitalization, revenues, and technology leadership.

Second, we tried to assess the longer-term opportunities a company has based on its current influence, the strength of its competitors, how much influence government policy will have on its success, and how likely it is and how quickly the company’s products can be implemented at a reasonable scale.

Third, we tried to assess a company’s access to capital. Some of the questions we asked were: Is it publicly traded or privately held, how strong is its balance sheet, and, perhaps most important, how much support can it expect from government?

Fourth, we looked at a company’s customers, their size, and their influence in their own industries. Finally, we tried to assess how high the barriers are to competitors entering the same sector. Likewise, how well can a company fight off competition that’s already in the sector?

Not every company has a top rating in each category, but the ones we’ve picked have a good many of them.

In addition to looking at the companies, we’ve also identified a few issues that are going to provide the context for alt energy companies in the years ahead. Perhaps the most important of these, from a commercial standpoint, is what policies China and the US will adopt. China plans to spend aggressively on its own domestic alt energy initiatives, and it is pouring enormous amounts of money into the coffers of several of the country’s manufacturers.

Other areas that bear watching are consumer acceptance for electric vehicles and plans for infrastructure investments in the electricity grid and in smart-grid technology.

Solar Photovoltaic

There are dozens of companies developing products to tap into the solar PV market. The issues in that market come down to volume and cost compared with efficient conversion of sunlight into electricity. Thin-film technology has emerged as the cost leader, and, because it is somewhat easier to manufacture, the volume leader as well. Crystalline silicon technology has been more costly to produce, but the higher conversion rates have helped keep the costs reasonably comparable to thin-film cells.

The ‘holy grail’ of solar PV makers is cost parity with fossil fuel-generated electricity, like coal-burning power plants. The race to parity is the next great competition. The first company to cross the finish line will need to get a lot of help from the makers of all the equipment that goes into finishing and installing solar panels, of whatever technology. Solar PV makers need to ramp production, lower costs, and win big contracts for utility-scale projects.

1. First Solar Inc. (NASDAQ:FSLR) was until recently the volume leader in the solar PV industry. It’s thin-film products offer a significant price advantage over the mono- and multi-crystalline products offered by its competitors. From 2009 to 2010, First Solar reduced its cost by 14% to $0.76/watt. No other solar technology is even close. Combined with a market cap of around $12 billion, a solid European customer base (which could erode if government subsidies are cut substantially or eliminated), a solid balance sheet and its own installation pipeline, First Solar is in a very good position to prosper.

The company also has a joint venture in the works with a Chinese partner to build a 2,000 megawatt solar PV project in Inner Mongolia. First Solar’s contract for the deal is being challenged by some Chinese solar PV makers. If the company loses the deal it would be a big blow to its plans. However, losing the deal may not be the worst thing that could happen.  That is because it would prevent First Solar from having to share its technology with the Chinese, which is a condition of the original contract award. Keeping the crown jewels in the vault may be worth more than the few billion that the Mongolian project will generate.

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2. SunPower Corp. (NASDAQ:SPWR) currently boasts the highest conversion rate of sunlight to electricity of all the solar PV makers. The company’s components business accounted for 61% of all its revenues in 2009, up from 40% in 2007. The company’s components include solar panels and inverters. SunPower’s systems business declined from 60% in 2007 to 39% in 2009. To turn that back around, SunPower has acquired a downstream company with a good project pipeline. That acquisition should start the turn-around in 2010, and continue to improve in 2011.

SunPower’s international business accounted for 71% of its 2009 sales, and it has a strong position in Germany, which is expected to install about 6,700 megawatts of solar PV in 2010. One megawatt generates enough electricity to power 800 households for an entire year. SunPower, however, is not among the low-cost providers and must depend on its superior (for now) conversion rate to differentiate itself from its competitors. For SunPower to live up to its place on our Top 25, it needs to maintain its technological leadership and become more competitive on downstream projects.

3. Suntech Power Holdings Co. Ltd. (NYSE:STP), 4. Trina Solar Ltd. (NYSE:TSL), 5. Yingli Green Energy Holding Co. Ltd. (NYSE:YGE), and 6. LDK Solar Co. Inc. (NYSE:LDK) join this list for what they have in common. And that is the deep pockets of the Chinese government. Since the beginning of 2010, these four companies have received a total of nearly $26 billion in loans from their government. All four sport market caps lower than $2 billion, but all four are among the top five global manufacturers of solar cells.

The reason these companies ship more solar PV cells than any competitor except First Solar is their focus on low-cost – SunPower is not a low-cost provider. The top five low-cost providers are currently selling contracted cells for less than the spot price. This will hurt margins somewhat now. However, because they have already lowered their pricing, the impact on margins next year will not be as great. Competitors, especially from Europe, that are now seeing premium pricing are less well-prepared for the drop in shipments that is forecast for the first quarter of 2011.

The Chinese companies plan to use a substantial amount of their government loans to build more manufacturing capacity. Some of that new capacity will meet demand inside China, which is expected to double its new solar installations in 2011.

Of the four Chinese companies, it is impossible to pick a winner at this point. All four are well set-up to prosper and all four could be technology leaders as well as cost and shipment leaders in five years or less. National governments are almost certain to provide more policy support for solar power, consumer costs for rooftop systems will fall, and there is likely to be a trend toward consumer leasing as well. Now is a good time to be one of the leading solar companies in the world.

Thermal Solar

This version of solar power is often called concentrated solar power, or CSP. Rather than implementing photovoltaic cells, CSP involves an array of light-gathering mirrors that reflect the light onto a liquid-filled pipe that is used to heat water to generate the steam that drives a turbine. In general, a thermal solar plant costs less than a solar PV plant at a utility-size scale. That is their finest feature.

7. Solar Millennium AG (OTC:SMLNF) is a German-based company that designs and builds solar thermal plants using parabolic trough technology. The company recently received approval from the California Public Utilities Commission to construct the first two of four plants that will generate 1,000 megawatts of electricity when all four plants are built. The first two plants are scheduled to be connected to the grid in 2013 and 2014 at a cost of about $1 billion each. This is the largest solar project in the world.

Spain and the US have led what is so far very limited development of solar thermal plants. One estimate has the global total of installed capacity at 2,715 megawatts in 2010. By 2020, the forecast total installed capacity could reach 122,252 megawatts. That is a dizzying growth rate.

Government loan guarantees and other incentives have a large impact on the ability of a small cap company like Solar Millenium to finance its projects. China, as is typical, will play a large role in the success of solar thermal plants. Another important component the success of solar thermal is the ability to store either the electricity or the heat produced by the plant for use when the sun is not shining. Advanced battery technology, to store electricity, and molten salt storage for heat are likely to be critical to solar thermal generation.

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8. BrightSource Energy (privately held) is an Israeli company that, like Solar Millennium, has recently received approval to construct a large solar thermal project in southern California. The Ivanpah project will generate 370 megawatts of electricity. The company’s technology differs in that it uses an array of mirrors to track the sun and focuses the sunlight on a boiler that sits on top of a tower to create steam that turns a traditional turbine at the base of the tower.

BrightSource has built nine such projects in the California, although none is as large as the Ivanpah project and all used parabolic trough technology. The company claims that its new tower designs improves conversion rates from about 36% to more than 40% while reducing costs. The company has built a tower plant in Spain, just one of several now operating in that country.

BrightSource and Solar Millennium face competition from a number of larger companies, primarily from Spain. But all that competition may be needed if solar thermal really takes off. Some analysts predict that solar thermal generation will be able to match coal-fired generation costs per kWh, or kilowatt-hour, in less than ten years. An average U.S. home uses about 9,000 kWh of electricity each year.

Wind Power

Like sunlight, global winds have an enormous capacity to generate electrical energy if only a couple of problems can be solved. First, how to smooth out delivery at those times when the wind isn’t blowing. Second, how to deliver that electricity from the windiest places to those areas where it can be used.

Both are gnarly and costly issues that will almost certainly need substantial government investment. Storing wind-generated electricity requires large, instantly addressable batteries or similar technologies that aren’t available yet. Connecting to the grid, while comparatively easy, is very expensive. Conventional coal- and gas-fired power plants are also likely to resist putting massive amounts of wind-generated power on the grid because the marginal cost of a kWh of wind power is essentially zero. That means that wind power will be a price-taker in the constant bids for power, driving prices for coal- and gas-fired power below their costs. In some respects, the success of wind generation has caused these issues.

9. General Electric Co. (NYSE:GE) was among the first of the giant conglomerates to commit itself to alternative energy products. The company’s CEO, Jeff Immelt, launched the initiative in 2005 aimed both at building new products and reducing GE’s own greenhouse gas emissions. At the time, Immelt predicted 10% annual growth for years on end.

In 2009, the company’s energy infrastructure business accounted for nearly 24% of GE’s consolidated revenue, up from about 21% in 2008 and about 18% in 2007. For the third quarter of 2010, operating profit from the group remained flat while overall profits fell 5%. That is in the face of a 14% decline in revenue compared with the same period in 2009.

GE has its sights set on a significant piece of the estimated $13 billion Chinese wind power industry. Installations of wind turbines in China are likely to grow from 25,000 megawatts in 2009 to 150,000 megawatts in 2020. GE entered joint ventures with Harbin Electric to provide turbines for both onshore and offshore wind projects.

10. Vestas Wind Systems A/S (OTC:VWSYF) is a Danish company that has installed wind systems for more than 30 years and has installed more than 41,000 turbines worldwide. The company’s market cap is about $7.82 billion. The company is on track to have its best year ever in terms of new orders, taking $5.45 billion in orders for the first half of 2010. The downside is that Vestas’s gross margins for the first half of the year were a meager 5%, down from nearly 22% in 2009.

Vestas has opened an R&D center in Beijing and already has its largest manufacturing operations in China. But China has not been good to the company. Non-Chinese-owned companies, including Vestas, claimed 71% of China’s wind power market in 2005. In 2010, that number has fallen to just 14%. The good news is that China’s market is so large that Vestas will still sell more turbines in China than anywhere else.

11. Siemens AG (NYSE:SI), a German conglomerate with a market cap of about $98 billion, offers products and services in a wide range of renewable technologies, including wind. The company has installed about 9,000 megawatts of wind turbines globally and is also a major player in solar thermal plants and transmission and distribution technology.

Siemens does not have the same level of exposure in China as do GE and Vestas. At the end of its third quarter in June, Siemens reported new orders from China of $5.57 billion compared with new orders worth $16.22 billion from the US. Siemens still generates more than twice the revenue in its fossil power division as it does in renewables, but fossil revenue is falling slightly and renewables revenue is rising dramatically. Much of that rise is due to the company’s success with offshore wind projects. Not surprisingly, the company’s power transmission division is contributing significantly to revenue as Siemens wins orders to connect offshore wind farms to the electricity grid.

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12. China Longyuan Power Group Corp. Ltd. (Hong Kong) is not strictly a wind power company, but that is the company’s original and largest business. It nearly doubled its installed base to more than 4,500 megawatts of wind power in 2009, putting it among the top five wind energy companies in the world. The company completed its IPO on the Hong Kong exchange in December 2009, raising $2.26 billion.

China Longyuan, like other Chinese wind turbine makers Sinovel and Xinjiang Goldwind, stands to profit handsomely from the government’s plan to spend more than $700 billion in the next ten years to build cleaner energy supplies. In its 2009 annual report, the company noted that it planned to install another 2,000 megawatts of wind power in 2010. In the first half of 2010, earnings jumped nearly 60%.

Wind and Solar Farm Construction

As solar PV, solar thermal, and wind generation scale up, each confronts one of the hardest nuts to crack with alternative energy: how to get the electricity onto the grid? The sun typically shines brightest and the wind blows hardest where the population tends to be low. The distances that the power must travel to reach consumers are sometimes vast, and there are few points of convergence with the existing electricity grid.

Building these connections is expensive, but that may not be the biggest problem. Most people don’t want to have to look at the massive towers, and many property owners have banded together to oppose any development of power lines. A solution to this opposition will have to come from governments, and given how dysfunctional some governments are, we may have to wait a long time for a solution.

The number of companies that can tackle this kind of construction project is limited. Those that have experience doing this work are even fewer, but they are likely to be crucial to the development of large, utility-scale solar and wind projects.

13. ABB Ltd. (NYSE:ABB) is a Swiss company that manufactures all kinds of gear for the transmission of electricity.  It also provides design and construction for the facilities needed to get wind and solar power onto the grid. The company has been around for more than 120 years and has a market cap of around $50 billion. As of December 2009, ABB had more than $7 billion in cash and about $2 billion of long-term debt. It generated over $3 billion in free cash flow in 2009. It’s solid.

Connecting alternative generation sources to the electricity grid and making the grid smart will generate billions of dollars in projects. Goldman Sachs has estimated that upgrading the global electricity transmission and distribution network will drive $750 billion in incremental spending over the next 30 years. ABB will be near the head of the line for a nice chunk of that.

If you’re looking for the next big thing in transmission and distribution, keep an eye on high voltage direct current (HVDC) transmission. This high-cost, complicated technology reduces energy lost to heat in electricity transmission, which in turn reduces the amount of electricity that has to be generated in the first place. This technology is already being used in some places, but widespread adoption remains in the future.

14. Iberdrola Renovables SA (OTC:IRVSF) is a spin-off of Spain’s giant Iberdrola SA electric utility company. Iberdrola retains more than 80% ownership in IR which is the world’s largest owner/operator of wind farms. Slightly more than half IR’s 10,752 megawatts of installed capacity at the end of 2009 was located outside Spain. Installed capacity growth year-over-year was roughly 16%.

IR posted 2009 revenue of about $1.2 billion in Spain and $1.1 billion in the US, the company’s two largest markets. IR will partner with Sweden’s Vatenfall to construct a 7,200 megawatt windfarm in the North Sea, currently scheduled to start construction in 2015. The company expects to install 1,000 megawatts of new capacity in the US in each of the next two years. IR is the second largest operator of wind farms in the US, with 41 facilities and more than 3,800 megawatts of capacity. IR’s focus on the US is its big gamble.

Mining

It is perhaps ironic that a good deal of the world’s alternative energy technology depends on minerals that need to be extracted by mining. Wind power may itself be emissions-free, but mining for the rare earth metals that are used in the wind turbines is certainly not. That is also true for the lithium used in batteries that are likely to be the main source of energy for electric vehicles.

There are many miners in every corner of the world already digging out lithium and the rare earth metals, but only a small number can really sway whole industries and markets.

15. Sociedad Química y Minera de Chile S.A. (NYSE: SQM) is the largest lithium miner in the world. The company’s lithium output fell by -26% year-over-year in 2009 to 21,300 metric tons. Revenues fell by -54.5% in 2009, and the outlook for 2010 was also weak due to a 20% price cut the company instituted in September 2009. The price cut was intended to boost sales, and that has apparently worked. In the first half of 2010, SQM’s lithium sales jumped 82% year-over-year compared with the same period a year ago. Revenues are up 48% as well.

The Chilean government considers lithium a strategic resource and strictly controls its exploitation. Of about 100 new lithium mining projects in the world, only two are located in Chile, where the USGS, the United States Geological Survey, estimates that 75% of the world’s lithium supply is locked up. As long as SQM has a stranglehold on Chile’s lithium deposits, it essentially controls the world’s supply of the metal.

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16. Molycorp, Inc. (NYSE:MCP) has been a publicly traded US company only since late July 2010, although its chief asset, the Mountain Pass mine in southern California, has been in operation on and off for more than half a century. Molycorp plans to restart mining operations early next year to produce the rare earth elements, REEs, so critical to modern life.

The company offers an alternative to Chinese mines which now produce about 97% of the world’s supply of REEs. The current spat between China and Japan has stopped the flow of REEs to Japan, even though the Chinese government denies having ordered the halt in exports. REEs are used in wind turbines, MRI scanners, consumer electronics, electric cars, and, not least, defense systems.

Molycorp must be wary of China dumping REEs on the market, lowering margins and making it difficult for the US company to turn a profit. Low wages in China and less stringent environmental standards could also make Molycorp’s life difficult. But it’s hard to see how the US government, and especially the defense department, will stand by and let a US producer of critical minerals get shuttered by a foreign government.

Biofuels

Biofuels are defined as transportation fuels produced primarily from renewable plant matter. In the US, almost all biofuel is corn ethanol. The US supports and protects its corn ethanol industry with a $0.45/gallon subsidy on the production of ethanol, and a tariff of $0.54/gallon on imported ethanol. The government also supports the oil and gas industry with plenty of tax breaks and incentives, but that’s not the point.

The point is how effective corn ethanol is in reducing US dependence on imported liquid fuels and how effective it is in reducing carbon emissions. The answer to both questions is, “Not much.” The Congressional Budget Office recently released a report on biofuel tax credits, and found that producers of corn ethanol get $0.73 to provide the same amount of energy as exists in a gallon of gasoline. The cost of reducing CO2 emissions is about $750/metric ton of CO2 avoided. A ton of carbon dioxide on the EU exchange currently fetches less than $20/ton, and has never been higher than $40/ton.

Unfortunately, there is nothing on the horizon that offers a substitute for ethanol. The various other algae-based or non-corn based fuels are barely out of the lab and are even further away from making a difference in the US fuel supply than is corn ethanol.

17. Cosan Ltd. (NYSE:CZZ) is Brazil’s largest producer of sugar cane-derived ethanol. Cosan does not own most of the mills that produce the cane ethanol — the company controls the distribution and retail sale of cane ethanol in a country where about 77% of the nation’s fleet are flex-fuel capable. The company entered a $12 billion joint venture with Royal Dutch Shell earlier this year that will have an annual production of 2 billion liters of ethanol and more than 4,500 service stations to sell from.

Cosan is also likely to benefit from the recent US EPA decision to allow a 15% ethanol blend (E15) in some US cars. That will lower US exports of corn ethanol, which have supplanted a portion of Brazilian exports, and make Brazil’s ethanol more costly. The joint venture with shell is also planned to expand into a global business eventually.

Batteries

For the most part, battery technology today is not a lot different from what it was in the 19th century. As consumers got more demanding of batteries for portable devices, the technology did improve some with the development of nickel-metal hydride and lithium-ion technologies. Those were significant advances, but the challenge now is to get way better.

The market for lightweight batteries to power the latest round of mobile devices is growing, but the biggest growth appears to be in the automobile sector and the battery storage sector. Electric cars with varying battery requirements are about to hit the world’s roads. Batteries are also being designed to store the electricity generated by intermittent sources such as wind and solar. If development of these technologies continues to make progress, batteries are expected to play a big role in the future of alternative energy.

18. Advanced Battery Technologies (NASDAQ:ABAT) is a Chinese company with a modest market cap of just $270 million. In 2008, none of the company’s revenues came from vehicle batteries. In 2009, the company pulled in $21 million in revenue from vehicle battery sales, mostly for transit buses in China. In the first half of 2010 the company has garnered more than it did in all of 2009 from vehicle batteries, and the company’s total revenue for the first half of 2010 is already higher than full year 2009 revenue.

This may not seem like such a big deal, but remember, batteries are about the same as they were 150 years ago. There is no Moore’s Law that will double performance and halve the price every two years. That won’t happen soon, if ever, with batteries. So the battery companies that are posting a profit now, even a small one like Advanced Battery, are in a strong position going forward. And the Chinese battery industry, like other Chinese clean-tech companies, benefits from substantial financial support from the government.

19. A123 Systems Inc. (NASDAQ:AONE), unlike its Chinese counterpart, is not making a profit, but it is well capitalized and has a market cap approaching $1 billion. Also like Advanced Battery, A123 sells into the vehicle market, but it is focusing more effort on its grid-connected storage batteries. The transportation market accounted for three times more revenue in 2009 than in 2008, and the same was true for its sales in the grid market. Sales in the consumer markets fell by about two-thirds in the same period. This is a company that is transforming itself, and it’s not unlikely that grid storage products will jump from 15% of product revenues (in 2009) to something closer to 35%.

The market for lithium-ion batteries for electric cars is expected to grow from about $1 billion in 2011 to nearly $25 billion in 2015. That is not a misprint. A123 has a contract to supply vehicle batteries to China’s largest carmaker, SAIC Motors. That should help turn the company’s profit picture around, but like every other clean-tech company that wants a piece of the Chinese market, A123 is very likely going to have to part with some its proprietary technology to meet the Chinese government’s rules for technology transfer. A123 also has two major customers for its grid-connected batteries, BAE Systems and AES Energy Storage, which together account for about 75% of the company’s revenue. That’s risky, but if A123 can deliver, these two customers could be enough to make the company profitable next year.

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20. Maxwell Technologies, Inc. (NASDAQ:MXWL) is perhaps the leading maker of ultracapacitors, a device that stores electricity and that can be charged and discharged both quickly and many more times than any battery. Ultracapacitors are used in regenerative braking devices in electric and hybrid electric vehicles, wind turbines, and consumer devices like uninterruptible power supplies.

But where Maxwell could really shine is in a stop-start mechanism for hybrid or traditional gasoline engines. Stop-start technology turns off the car’s engine when the driver’s foot is on the brake and the car is standing still. When the driver’s foot is moved to the accelerator, the stop-start system starts the engine again. Start-stop technology is a prime candidate for near-term inclusion on all new cars because it helps meet government mileage requirements and reduces emissions. Because batteries alone can’t deal with the hundreds of thousands of starts and stops, an ultracapacitor could easily and cheaply take on that role. Ultracapacitors could also play a significant role in grid storage, where their ability to discharge rapidly could be used to smooth electricity transmission.

Smart Grid

A precise definition of the smart grid is nearly impossible, but a reasonably comprehensive description includes advanced metering infrastructure, AMI; distribution automation, DA; home area networking, HAN; and smart enterprise. The primary reason to build out a smart grid is to reduce peak demand for electricity. That means fewer power plants would need to be built and fewer emissions would be poured into the atmosphere.

One research firm estimates the total US market for smart grid technologies will grow from $5.6 billion in 2010 to $9.6 billion in 2015. The firm also forecasts the largest growth will come in the DA market and that 48% of the 140 million US electricity consumers will AMI (smart) meters installed.

Smart meters will allow two-way communication between customers and the utility, but the full capabilities of that function are still some years away. Distribution automation refers to the ability of the national grid to heal itself in the event of a fault. Because the US grid is so old and dilapidated, this capability is essential to maintaining electricity service. Other distribution automation devices will help smooth out and regulate the power on the distribution lines. The costs for these improvements will fall to utilities and, ultimately, their customers.

Home networking includes appliances with enough brains to talk to the smart meter and figure out when electricity is cheapest for a particular customer task. Think of a washing machine where the clothes are tossed in at some point during the day and washed at night when electricity is usually cheaper than during the middle of the day. This bit of the smart grid will take longer to implement and be more costly because it includes so many industries and depends on consumers being willing to spend the extra money to buy smart appliances and other household items.

The smart enterprise piece of the puzzle is already well under way and won’t show much growth. Businesses have already begun adopting advanced metering and other technologies because the payback is established. No business wants to pay more for electricity than is necessary.

The US electric power grid has been called the engineering wonder of the 20th century. Bringing that grid into the 21st century may well be in the running for this century’s engineering wonder.

21. Itron, Inc. (NASDAQ:ITRI) has been in the utility metering business for more than 125 years. The company estimates that there are about 1.3 billion electricity meters installed globally, of which just 9% are automated. Of the estimated 175 million meters installed in the US, some 47% use automated meter reading technology, and Itron claims that its technology is installed on about half those meters.

The company also makes natural gas and water meters, which also use technology to measure usage and communicate with the central utility. Itron’s water meters, for example, can detect leaks that might otherwise go unnoticed for a long time, helping to keep customers’ bills down and reduce water usage. The company claims nearly 8,000 customers worldwide and received about 17% of its total revenues in 2009 from its 10 largest customers.

Itron’s free cash flow has been around $40 million in the last three quarters and the company’s quarterly earnings growth in the June quarter was nearly 76% year-over-year. The company has also entered a joint development agreement with Cisco Systems to create a reference design for smart grid network communications using IPv6 protocol, the newest version of the Internet Protocol. Itron will also embed Cisco’s technology in its meters and will sell Cisco equipment with its smart meter products. This could well be a trial marriage, given Cisco’s penchant for acquisitions.

22. American Superconductor (NASDAQ:AMSC) offers a variety of technologies and products that are used at both ends of the electrical grid and everywhere in between. The company’s growth derives from the boom in alternative energy generation, particularly wind power, that needs to be connected to a national grid. One estimate of the amount needed to upgrade the US electricity grid totes up to $915 billion between now and 2030.

And American Superconductor is not focusing only on the US market. The company did 87% of its business internationally in 2009 and has paid special attention to the wind power markets in China and India. China expects to increase its wind generation capacity by a factor of four by 2020. There are huge opportunities here, and American Superconductor is well-placed to take advantage of them.

The company’s high temperature superconducting wires carries more than 150 times the power of plain copper wire, and American Superconductor claims that it supplied about 80% of this type of wire used in product development and demonstration projects over the past few years. The company recently announced an order for about 1,800 miles of its high temperature cables for delivery to a South Korean firm beginning in 2012. This is very likely just the company’s first significant order.

Others to Watch

23. Cree Inc. (NASDAQ:CREE) manufactures LED chips, LED components, LED lighting, and other products that are just beginning to gain a toehold in the market. The ubiquitous 100-watt incandescent light bulb will be a thing of the past in the US beginning in 2012. Consumers will need to replace them with compact fluorescent and LED lighting. Right now CFLs have a significant cost advantage over LEDs, but costs for LED lighting are falling fast as the big players light Phillips and General Electric get in the game.

A 40-watt LED bulb consumes only 9 watts of electricity, but it could cost about $50 or more. It would, however, last for more than 20 years. LED lights use a semiconductor chip to create light, not a burning filament like incandescent bulbs or a burning gas as with fluorescents.

Cree’s total revenue for its recently ended 2010 fiscal year was about $877 million. General Electric posted sales of nearly $3 billion in its lighting unit in its most recent fiscal year. That’s a big difference, but not as big as it could be. Cree’s problem will be to get its costs down as quickly as the big guys can and gets its output up to match theirs. They’ve got a very good chance.

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24. Bloom Energy (privately held) is the celebrity among the 100 or so companies working on fuel cells. A profile of the company of CBS’s “60 Minutes” earlier this year spotlighted Bloom’s solid oxide fuel cell. The company uses plain sand baked into a slab and then coated with a “secret sauce”. The coated slabs are packaged up into modules, connected to a fuel line, and switched on. The company’s “energy server” generates 100 kWh of electricity, enough to power about 100 average homes or a small office building for a year. Carbon dioxide emissions are cut by about 40% per kWh if natural gas is used and 100% (carbon-neutral) if biogas is used.

The company has a number of high-profile customers, including Google, Wal-Mart, Safeway, and Adobe Systems, and has attracted some $400-$450 million in venture funding over a period of about eight years. The company also faces substantial competition from larger companies and a number of start-ups offering different fuel cell technologies.

Bloom’s immediate goal is to ramp production to one of its energy servers per day within the next few months. The company is also developing a unit to power a single house that it hopes to sell for about $3,000.

25. Areva (France-CEI) is the French-government-controlled nuclear power plant designer and builder. There are plenty of arguments about whether nuclear power should or shouldn’t be considered an alternative energy source, but the fact is nuclear plants emit no carbon, the technology is safe, and it offers a lot of electricity generation in a single plant. A utility-scale nuclear plant can produce more than 1,650 megawatts of electricity, where the largest wind farm under development is about half that size.

The problem with nukes, of course, is that most people are scared to death of the plants. No new nuclear power plants have been built in the US since the 1970s. But while the US is certainly in Areva’s sights, the company is counting on building new nuclear plants in China. Of the 24 reactors currently under construction in China, 20 are using Areva technology and the company is directly working on 4 of the projects. To reach its goals for increased nuclear generation, China would need to build 60 new reactors by 2020. Areva is well-positioned to get a share of that work.

Areva also owns uranium mines, fuel reprocessing plants, and offers operational services as well. The company has added solar, wind, and biomass operations to its renewables portfolio as well. The renewables portion of the company’s backlog amounts to just $1 billion of a total backlog of $58 billion, but the company is aiming at boosting its renewables revenues to a third of its total.

Paul Ausick with Charles B. Stockdale

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