Alternative Energy Watch: LDK Solar Looks to LEDs; Wind Power Takes a Hit in Idaho; US Geothermal Outlook Upbeat (LDK, CREE, VECO, AIXG, RBCN, LEDS, ORA, CPN, HTM)

It is time for our daily review of the alternative energy sector, and today hits LEDs, wind power, and geothermal developments. Adding to an already crowded field, LDK Solar Co. Ltd. (NYSE: LDK) will spend $40 million on a new plant in China to make sapphire substrates for used in making LED. Existing companies like Cree Inc. (NASDAQ: CREE), Veeco Instruments Inc. (NASDAQ: VECO), Aixtron AG (NASDAQ: AIXG), Rubicon Technology, Inc. (NASDAQ: RBCN), and SemiLEDS Corp. (NASDAQ: LEDS) have been struggling recently as demand has weakened and prices keep falling.  Faced with declining margins in the solar PV market, LDK appears to have decided that the current slowdown in LEDs is only temporary. Time will tell.

An industry group called the Geothermal Energy Association has issued its annual update on the state of geothermal energy development in the US. The report notes that US geothermal generating capacity now exceeds 3,100 megawatts in nine western states. Publicly traded companies that focus on geothermal projects include Ormat Technologies, Inc. (NYSE: ORA), Calpine Corp. (NYSE: CPN), and US Geothermal Inc. (AMEX: HTM).

According to the association, there are 170 active geothermal projects in 15 states developing about 5,100-5,700 megawatts of geothermal generation. The report notes that up to 772 megawatts are in an advanced state of development and should be completed in the next few years. The long project development times and the relatively limited amount of electricity available from any single project are probably the main contributors to the slow development of geothermal projects in the US.

In Idaho, the state senate has rejected an extension of the state’s alternative energy tax credit by a vote of 18-17. An apparent deal to extend the rebate and to lower the maximum energy generation level for alternative energy projects. Some legislators and lobbyists contend that the end of the tax rebate will kill wind development in the state.

Idaho legislators had already rejected a moratorium on new wind farm construction. The state had encouraged wind development in recent years, and the tax rebate helped build 400 megawatts of wind generation since 2005. Rather than institute a moratorium on new construction, which some legislators saw as reneging on past promises, the state will achieve the same result by eliminating the rebate.

Finally, the European Union’s executive body, the European Commission, is set to propose a carbon tax of about $29/metric ton beginning in 2013 on fossil fuel products like gasoline, natural gas, and coal. The Commission’s goal is to meet the agreed 2020 emissions target of reducing carbon dioxide emissions in the EU by 20% in 2020 relative to 1990 levels. The carbon tax supplements the existing EU carbon market, which has not been entirely successful in bringing down emissions.

The carbon tax faces significant hurdles, not the least of which is a reluctance by sovereign governments to allow the EU to set tax policy for member nations. And before the tax can be levied, all 27 member nations must agree unanimously on the new tax. Such an outcome is the longest of long shots.

Paul Ausick