There was no good news for Chinese solar makers either, even given news earlier in the week of the government’s adoption of a higher feed-in tariff for solar generation. JA Solar Holdings Co., Ltd. (NASDAQ: JASO), JinkoSolar Holding Co., Ltd. (NYSE: JKS), LDK Solar Co., Ltd. (NYSE: LDK), Trina Solar Ltd. (NYSE: TSL), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) all finished lower yesterday and are all anywhere between -16% and -33% lower for the past month.

The major issues in the solar PV market were identified at least a year ago, but the reality is perhaps worse than anticipated. Massive expansion in production capacity coupled with reduced incentives in Europe have driven margins into the cellar. First Solar reported EPS of $0.70, considerably below EPS expectations of $0.92, and revenue totaled $533 million, well below estimates of $582 million.

And among US solar PV providers, First Solar is perhaps the best. SunPower Corp. (NASDAQ: SPWRA) is trading about-20% below its price of one year ago, even following a massive investment by Total SA (NYSE: TOT). Other US solar PV makers, Evergreen Solar, Inc. (NASDAQ: ESLR), Energy Conversion Devices Inc. (NASDAQ: ENER) and Ascent Solar Technology, Inc. (NASDAQ: ASTI), are all trading below $1/share and are no more than marginal players any longer.

GT Solar, and to some degree MEMC, have the advantage of not producing solar modules and panels. GT Solar’s share price has risen around 50% in the past year on the strength of orders for its solar PV manufacturing equipment. That won’t last forever, but it looks good now. MEMC is holding its own on wafer production and sales, but the glut of solar panels will chip away at this stock over the next few months.

The solar sector has gone from being a growth area to something less than even a value play. The enormous increase in manufacturing capacity that is taking place this year will take several years to stabilize with demand, which is driven more by government policy and incentives than anything else.

Some of the weaker US and Chinese players are destined either to be acquired or to just fade away. In the US, First Solar and SunPower look to be the only long-term survivors. In China, it’s anyone’s guess because so much depends on influence and connections with the government and with government-controlled banks. The recent accounting issues with Chinese solar companies will continue to be a weight unless and until the government brings accounting practices more in line with more widely accepted standards.

First Solar shares are down about -2.5% in the first hour of trading this morning, to $105.26, after setting a new 52-week low earlier, and the shares now trade in a 52-week range of $103.82-$175.45. If First Solar can avoid falling below $100/share today, that will be a victory. The Guggenheim Solar ETF (NYSE: TAN) is down about -1.75%, at $5.65, after posting a new 52-week low earlier this morning of $5.60.

Among the Chinese companies, JA Solar has put up a new 52-week low of $4.05 this morning, before recovering slightly to $4.09, down about -3.5%, with a new range of $4.05-$10.24. JinkoSolar is off more than -10%, to $17.75, in a 52-week range of $17.30-$41.75. LDK Solar is essentially flat, at $6.00, in a 52-week range of $5.69-$15.10.

MEMC is also down more than -3%, having posted a new 52-week low of $5.82, against a 52-week high of $15.04. Only GT Solar is showing some positive news, up more than 2%, at $12.07, in a 52-week range of $6.65-$17.50.

Paul Ausick

We have shown a brief news summary and the implied stock price changes on each after the 4:00 PM EST closing bell.

Activision Blizzard, Inc. (NASDAQ: ATVI) closed higher by 1.1% ahead of earnings and its earnings report was given a boost by digital sales this last quarter.  Shares are up 3.6% at $12.25, but it will have to rise another 3% before it is outside of a longer-term trading range.

The Andersons, Inc. (NASDAQ: ANDE) beat earnings with $2.42 EPS versus $1.72 estimates as revenues grew 65%… Plant nutrients rule!  Shares closed down 1.5% at $38.49 but the stock is up over 7% in the after-hours at $41.25 versus a year range of $32.01 to $51.23.

Clearwire Corporation (NASDAQ: CLWR) rose handily today by 10% but is giving some back after a deeper loss in the quarter and after planning to add LTE Advanced-ready technology to its 4G network.  Shares are down 2% at $2.42 in the after-hours session.

comScore, Inc. (NASDAQ: SCOR) announced the acquisition of AdXpose for $22 million in stock, but the earnings are taking the stock south despite 38% revenue growth and 23% EBITDA growth.  Shares are down 14.5% at $18.00 after closing at $21.07 today.  Keep in mind that the 52-week range is $17.18 to $31.28.

Entropic Communications, Inc. (NASDAQ: ENTR) is down after a 14% drop in sales sequentially, even if it was a gain of 51% from the year ago period.  Earnings were down sequentially too.  This was not expected and shares are down a whopping 25% at $5.00 in the after-hours session.  Shares had already hit a 52-week low of $6.36 today.

GT Solar International, Inc. (NASDAQ: SOLR) is catching a bounce as the solar equipment maker beat earnings estimates and reiterated annual guidance.  GT shares fell 3.7% today but the stock is up 5.6% at $13.98 today in the after-hours session.  The 52-week range is $6.63 to $17.50.

Leap Wireless International, Inc. (NASDAQ: LEAP) was already weak after MetroPCS stunk up Wall Street this week with earnings.  Misery loves company in pre-paid cellular as it saw a drop in subscriber additions.  Leap Wireless fell 2.2% to $10.04 today and the stock is down 6.3% at $9.40.  That is under the 52-week low of $9.51 by the way.

MercadoLibre, Inc. (NASDAQ: MELI) had sales in line with targets but earnings were light for Q2; shares of the online payment and e-commerce platform in Latin America fell 2.7% but are down 4.4% more at $69.11 in the after-hours.

MEMC Electronic Materials, Inc. (NYSE: WFR) is trading up after beating earnings, even if the year is looking light on guidance.  The wafer producer for chip and solar companies was down 0.4% today but the stock is up 5.7% at $7.39 after hitting a 52-week low of $6.82 today.

Solarwinds, Inc. (NYSE: SWI), which is about as far as being out of the solar business as it can be, beat earnings and revenues, guided its third quarter in line with estimates, and guided 2011 in line with estimates.  Shares rose over 2% today and is up another 8% at $23.00 after the close.

Walter Energy, Inc. (NYSE: WLT) shares were down 2.5% today ahead of results and the company’s miss on earnings has shares down another 5.5% at $104.45.  That is a combined $9.00 move or so from yesterday’s close.

Web.com Group, Inc. (NASDAQ: WWWW) is surging after beating earnings expectations.  The big boost is coming as it is acquiring to acquire Network Solutions for $405 million in cash in a deal that is said to be at least 20% accretive to the $1.22 EPS figure for 2012 and with even higher accretion in 2013.  This is a coup, and the stock rose over 6% today to $8.66 and is up almost 30% at $11.00 in the after-hours.

Zipcar, Inc. (NASDAQ: ZIP) is surging after the company’s earnings report. The company raised full year guidance and shares are up 16% att $26.70 in the after-hours session.  Not bad at all for a freshly public company.

Zumiez Inc. (NASDAQ: ZUMZ) was significantly lower than expected in same-store sales gains of only 4.9%.  This one rose 6% to $27.10 today but the stock is down 13% at $23.50 in the after-hours session.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Clean Energy Fuels Corp. (NASDAQ: CLNE) is down on moderate volume roughly 1.5% premarket to $16.77, relative to a  52-week range of $11.75-$19.36.

Human Genome Sciences (NASDAQ: HGSI) is up 2.6% premarket to $24.30, relative to a 52-week range of $22.80-$30.48. The European Union’s European Medicines Agency approved the company’s Benlysta drug.

GT Solar International, Inc. (NASDAQ: SOLR) is up nearly 3% premarket to $15.56, relative to a 52-week range of $5.90-$17.50. Piper Jaffray reiterated an “overweight” rating on the stock, with a price target of $24.

Shengkai Innovations, Inc. (NASDAQ: VALV) is up more than 11% premarket to $2.28, relative to a 52-week range of $1.26-$8.50.

Another struggling company, Evergreen Solar Inc. (NASDAQ: ESLR) reported a -60% drop in sales for the first quarter of 2011 and has now received a deficiency letter from Nasdaq that the company no longer meets the $1/share minimum stock price and will be delisted unless the situation is corrected by next January 3rd.

One of the hottest solar stocks of recent days has been GT Solar International Inc. (NASDAQ: SOLR), which has announced several large orders for its solar manufacturing products. A new research report has now predicted a drop of -47% in manufacturing equipment sales in 2012. And solar PV maker ReneSola Ltd. (NYSE: SOL) has cut its guidance for the rest of 2011.

American Superconductor’s problems with Sinovel have been well documented and should be no surprise.  The writedown totals $74.7 million against previously stated revenues of $215.7 million. The company also said it expects revenues for its fiscal year ending in March 2011 to total just $307 million, far below the current Street estimate of $360 million, and more than -30% below original estimates.

The revenue loss is perhaps the least of the company’s worries. Because American Superconductor had booked the revenue before it was received, the company faces more uncertainty about its accounting practices. The company did say that it should have used a cash-based method of accounting. Shares are down more than -5%, at $8.08, having bounced back from an intra-day low of $7.44, virtually at the bottom of the 52-week range of $7.40-$38.88.

Evergreen’s announcement should also have been no surprise. In its SEC filing the company noted that if the shares are delisted, “the holders of its existing convertible notes will have the right to require the Company to repurchase their notes, which it is almost certain the Company would be unable to do. Such a default under the Company’s obligations to its note holders would likely cause the Company to file for bankruptcy.”

GT Solar has been a high flyer in the solar sector, posting a new 52-week high earlier this month. The company’s shares are getting beaten down nearly -9% today following a loss of more than -4% yesterday. Capacity expansions at solar PV makers have been driving GT Solar’s share price increases, but those capacity boosts are expected to result in serious oversupply by the end of this year and into the next two. Demand for more manufacturing equipment is expected to drop as well.

ReneSola shares are off more than -5% following the company’s pull back on quarterly revenue and gross margins. The revenue forecast for the June quarter was reduced from $280-$300 million to $235-$245 million. Analysts had been expecting $287 million. The forecast for gross margin fell from 25%-27% to 17%-19%.

The Guggenheim Solar ETF (NYSE: TAN) is also falling today, down more than -3.5%, to $6.46, after posting a new 52-week low of $6.44. The new range is %6.44-$9.34.

Paul Ausick

LDK Solar Co. Ltd. (NYSE: LDK) said this morning that it would repurchase up to $110 million worth of its ADSs either on the open market or through privately-negotiated sales. JinkoSolar Holding Co. Ltd. (NYSE: JKS) announced a similar plan in May to buy back $30 million in its ADSs. Solar equipment maker GT Solar Inc. (NASDAQ: SOLR) coughed up $203 million in late 2010 to buy back and retire some 26.5 million of its shares. Other solar makers that might follow suit include Suntech Power Holdings Co. Ltd. (NYSE: STP), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), and Trina Solar Ltd. (NYSE: TSL). JA Solar approved a $75 million stock buyback in late 2009.

Analysts currently have LDK Solar pegged with a median price target of $10.50/share. Following today’s announcement, the shares have gained about 7.5%, to $7.32, in a 52-week range of $5.00-$15.10. The company’s trailing P/E is just 2.36, and its forward P/E is only slightly better at 3.12. Its price-to-book ratio is 0.73 for its most recent quarter. This is a very good value for investors who believe that the solar sector is undervalued.

JinkoSolar has a median price target of $34.75. Shares are trading up about 0.4% today, at $25.07, in a 52-week range of $9.66-$41.75. The company’s trailing P/E is 3.19 and its forward P/E is 3.78. It’s price/book ratio is 1.28. Perhaps a value, perhaps not.

JA Solar carries a median price target of $7.75, and is trading down about -0.7% today, at %5.53, in a 52-week range of $4.48-$10.24. The company’s trailing P/E is 3.09 and its forward P/E is 4.67. The price/book ratio is 0.82.

Trina Solar has a median price target of $32.00, and is trading today at $20.52, up about 0.4% in a 52-week range of $17.00-$31.89. The company’s trailing P/E is 4.94 and its forward P/E is 5.73. The price/book ratio of 1.17.

Of these four Chinese solar PV makers, LDK appears to be the most undervalued, though not by much. JA Solar, too, has a price/book ratio less than 1, indicating that these two could offer some significant upside. By this measure, LDK may have done the right thing by buying back some shares.

Depending on how successful LDK is in boosting its share price, it’s possible that Trina and JA Solar could spend some of their cash to try to prop up their share prices. Trina had $791 million in cash at the end of 2010, while JA Solar had about $365 million. JinkoSolar, with about $172 million, may not be able to afford a buyback.

In the end, though, buybacks are not likely to boost the solar PV makers significantly. Oversupply and lower demand mean lower margins and reduced profits. Buying back stock won’t help that.

Paul Ausick

About the only significant change in the solar sector since yesterday is that Italy’s prime minister has said that the country will not build any new nuclear generation, instead going with renewables. That is boosting Italian solar shares and probably giving a boost to solar makers First Solar Inc. (NASDAQ: FSLR), LDK Solar Co. Ltd. (NYSE: LDK) and JA Solar Holdings Co. Ltd. (NASDAQ: JASO).

GT Solar makes production equipment used in manufacturing solar PV cells and LEDs. Its chief competitor in this market is Applied Materials Inc. (NASDAQ: AMAT). The race to build new solar PV manufacturing has taken off this year, and GT Solar is thriving.

The market for solar PV installations has wobbled all year, primarily due to a projected oversupply of solar modules resulting from lower projected installations in leading European markets. SunPower managed to dodge the takedown in solar PV makers with an offer of $23.25/share from oil giant Total. Other solar makers haven’t been so lucky, but now that the deal with Total is closing SunPower is coming face-to-face with reality.

Three separate analysts have now downgraded SunPower shares and lowered price targets for the rest of the year. Kaufman Bros. has lowered its price target from $23.25 to $14 on the theory that once the deal with Total is completed, this is the what the stock is worth. The Kaufman analyst also cut the company’s non-GAAP EPS estimate from $1.99/share to $1.42.

Goldman Sachs cut SunPower’s rating from ‘neutral’ to ‘sell’ primarily because the analyst doesn’t believe that the company can absorb the pricing declines quickly enough. Goldman’s analyst also lowered the stock’s target price to $14/share.

A third analyst at CLSA Asia-Pacific Markets cut his rating from ‘underperform’ to ‘sell’ and reduced SunPower’s price target from $18.50/share to $16.50. The move was based on the analyst’s belief that the deal with Total only temporarily boosted SunPower’s shares.

GT Solar raised its revenue forecast for its first fiscal quarter which ends on July 2nd from $140-$150 million to $225 million. The EPS estimate rose from $0.08-$0.11/share to $0.30/share, and GT Solar’s estimate of gross margins rose from 37% to 43%-44%. For the full 2012 fiscal year, revenue estimates were unchanged at $1-$1.1 billion with EPS of $1.55-$1.85/share and gross margins of 42%-44%.

Shares of GT Solar are up more than 6.5% today, to $12.99, near the top of the 52-week range of $5.36-$14.00. SunPower’s shares are trading down more than -1.5%, at $20.94, in a 52-week range of $9.61-$22.60.

First Solar’s shares are up more than 3%, to $119.87, in a 52-week range of $100.19-$175.45. LDK’s shares are also up nearly 3.5%, to $7.18, in a 52-week range of $5.00-$15.10. JA Solar’s shares are up about 5.5%, to $5.37, in a 52-week range of $4.48-$10.24. The Guggenheim Solar ETF (NYSE: TAN) is up about 3.3%, to $6.88, in a 52-week range of $6.40-$9.34.

Paul Ausick

In addition to the PowerShares fund, we’ll take a quick look here at the Guggenheim Solar ETF (NYSE: TAN), Market Vectors Global Alternative Energy ETF (NYSE: GEX), iShares S&P Global Clean Energy Index Fund (NASDAQ: ICLN), and Market Vectors Solar Energy ETF (NYSE: KWT).

PowerShares WilderHill Clean Energy (NYSE: PBW) is a non-diversified index tracker. The largest of its 58 holdings is SunPower Corp. (NASDAQ: SPWRA) at 3%, followed by Tesla Motors Inc. (NASDAQ: TSLA), GT Solar International Inc. (NASDAQ: SOLR), Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM), and Polypore International Inc. (NYSE: PPO). The fund’s market value is $448.7 million, and its 52-week range is $7.98-$11.42. PBW’s NAV is 9.00.

Guggenheim Solar ETF (NYSE: TAN) invests at least 90% of its assets in  stocks included in the MAC Global Solar Energy Index. It’s top five holdings are First Solar Inc. (NASDAQ: FSLR) at 14.38%, Hong-Kong listed GCL Poly Energy Holdings Ltd. at 8.99%, Meyer Burger Technology AG (OTC: MYBUF), Trina Solar Ltd. (NYSE: TSL) at 5.3%, and SunPower Corp. (NASDAQ: SPWRA). Assets under management total $165.2 million and the NAV at June 7th was $7.12. The 52-week range is $6.12-$9.16.

Market Vectors Global Alternative Energy ETF (NYSE: GEX) tracks the price and yield performance of the Ardour Global Index, and invests at least 80% of assets in stocks included in that index. The fund’s top five holdings are First Solar at 8.8%, Vestas at 8.37%, Cree Inc. (NASDAQ: CREE) at 6.21%, Enel Green Power SpA at 6.1%, and Iberdrola Renovables SA at 5.73%. The fund has $140.3 million of assets under management and its NAV is $19.22. The shares’ 52-week range is $17.81-$22.76.

iShares S&P Global Clean Energy Index Fund (NASDAQ: ICLN) tracks the price and yield performance of the S&P Global Clean Energy Index. The top five holdings are Germany’s Verbund AG (OTC: OEZVF) at 5.58%, Iberdrola Renovables at 5.47%, Empresa Nacional de Electricidad S.A. (NYSE: EOC) at 5.46%, China Longyuan at 5.44%, and SunPower at 5.4%. The fund’s net assets total $71.1 million and the NAV is $16.54. The shares’ 52-week range is $14.09-$19.00.

Market Vectors Solar Energy ETF (NYSE: KWT) is an index tracker for solar energy companies. It’s top five holdings are First Solar at 9.54%, MEMC Electronic Materials Inc. (NYSE: WFR) at 8.89%, Trina at 8.54%, SunPower at 6.35%, and Norway’s Renewable Energy Corp. ASA at 6.07%. The fund’s assets under management total just $29 million and its NAV is $10.55. The shares’ 52-week range is $9.04-$14.33.

Many of these funds (and their components) are down considerably and they are down so much against the 2008 peak-energy highs that many investors would rather not be reminded.  24/7 Wall St. has maintained for quite some time that many alternative energy investments may really just be leveraged oil bets in disguise.  These have not even lived up to that universally when oil rose.  Now investors will hope that the decommissioning of nuclear plants can be the next frontier for growth.  If not, global austerity measures may force solar projects to actually be evaluated on their real underlying costs basis just like other projects.

Paul Ausick

GT Solar International, Inc. (NASDAQ: SOLR) reported first-quarter earnings last night and the company posted EPS of $0.41 on revenue of $272 million. Analysts had been expecting EPS of $0.34 on revenue of $224 million, so GT Solar really stomped on the estimates. The company’s shares put up a new 52-week high this morning to post a new 52-week range of $4.96-$13.35.

The company makes the manufacturing equipment for solar PV makers. It took new orders during the quarter of $722 million, and has boosted both its full-year revenue forecast from $850 million-$1 billion to $1-$1.1 billion. The company also raised EPS guidance from $1.25-$1.50 to $1.55-$1.85.

Even though most solar PV makers are expecting an oversupply in 2011, many are going ahead with capacity expansion plans. That gives GT Solar and competitors like Applied Materials, Inc. (NASDAQ: AMAT) some fertile ground for sales in 2011. GT Solar also makes furnaces that are used in the manufacture of LEDs, another product that is expected to see good growth in 2011.

Another solar winner is the flexible thin-film technology known as CIGS, for copper indium gallium diselenide. Swiss scientists have posted a new record for CIGS energy conversion efficiency of 18.7%. The US National Renewable Energy Lab has also tested a CIGS cell that posts an energy conversion efficiency of 19.9%, but that technology is slightly different.

Thin-film leader First Solar, Inc. (NASDAQ: FSLR) has been working on developing its own CIGS panels, and was once rumored to be in talks to acquire privately held HelioVolt. The rumors haven’t panned out yet, and may never do so. Still, the CIGS technology seems to be a significant jump up in efficiency from the cadmium telluride (CdTe) technology that First Solar currently uses. CIGS technology could also lower total systems costs, called ‘balance of systems’ or BoS cost because they are lighter and don’t require all the heavy support structure of silicon-based PV systems.

The solar loser — again — is Evergreen Solar Inc. (NASDAQ: ESLR), which has seen the state of Massachusetts kill two of the company’s tax breaks following the shutdown of Evergreen’s Devens plant which cost 800 workers their jobs. The state has sent Evergreen a retroactive property tax bill for $1.5 million and has eliminated $7.5 million in tax credits. Evergreen’s shares are trading at $0.76, very close to the bottom of their 52-week range of $0.71-$7.14.

China grew its wind generation capacity by 62% in 2010, to a total of nearly 42,000 megawatts. But the country’s progress may be slowing down this year as a result of the difficulty of connecting wind power plants to the country’s electricity grid. [http://247wallst.com/2011/04/27/alternative-energy-watch-china-plans-to-spend-big-on-grid-equipment-maker-gets-big-order-solr-amat-ldk-cree-veco-amsc/] Approximately 30% of the country’s wind generation is stranded, and there are other troubles as well.

Chinese law requires that 70% of wind projects use local sources and, in many cases, foreign countries that want to build alt energy projects in China must have a China-based partner and must sign a technology transfer agreement. On a more positive note, China has enacted a law mandating compulsory cross-licensing of alt energy technology and recently passed another law that allows companies to obtain a license to use a patent that its owner is not developing. These licensing rules have allowed the country’s big wind turbine manufacturers, Goldwind, Sinovel, and DongFang Electric, to corner more than 50% of the wind turbine market in China.

Ultracapacitor maker Maxwell Technologies, Inc. (NASDAQ: MXWL) and the automotive division of Flextronics International Ltd. (NASDAQ: FLEX) have signed an agreement under which Maxwell will supply its ultracapacitors to Flextronics for use in regenerative braking systems and for start-stop systems in automobiles. Ultracapacitors act like batteries and store/discharge electricity very quickly over a wide range of temperatures and over a large number of cycles.

Finally, a divorce. Johnson Controls Inc. (NYSE: JCI) has filed papers to dissolve its joint venture with France’s Saft Groupe SA. The JV was developing lithium-ion batteries for hybrid and all-electric vehicles. The joint company has deals with Daimler Benz, BMW, China’s Chery, and US carmakers Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM). Johnson Controls will pay Saft $64 million for its part of the JV.

Paul Ausick

Identive Group (NASDAQ: INVE) is down nearly 20% premarket to $2.59, relative to a 52-week range of $2.94-$3.79. The company is issuing a public stock offering.

Sify Technologies Limited (NASDAQ: SIFY) is up 16% premarket to $5.15, relative to a 52-week range of $1.18-$8.54. The company announced a partnership with Deutsche Telecom.

GT Solar Inc. (NASDAQ: SOLR) is up 12.5% premarket to $13.08, relative to a 52-week range of $4.96-$12.53. GT Solar issued positive Q4 earnings and FY12 guidance.

We recently noted that a number of Chinese solar equipment makers were entering a sector dominated by established companies like GT Solar International, Inc. (NASDAQ: SOLR) and Applied Materials, Inc. (NASDAQ: AMAT). Demand for furnaces and wafer cutting machines is going to rise in China as solar cell makers ramp up production.

The old reliables are still kicking though, as GT Solar announced that it has sold $219 million worth of sapphire crystallization furnaces to a Chinese firm that makes LED lighting products.

The Chinese must be bullish on LEDs, given that LDK Solar Co. Ltd. (NYSE: LDK) has already said that it would build a new $40 million plant to make the sapphire substrates used in LEDs. LED lighting leader Cree Inc. (NASDAQ: CREE) has been struggling recently, while competitor Veeco Instruments, Inc. (NASDAQ: VECO) has posted sequential profit growth of more than 200% and revenue growth of nearly 90%. Growth in LEDs seems to be the consensus view, Cree notwithstanding.

China’s largest electricity grid builder and operator is state-owned State Grid Corp. Catchy name aside, this outfit has big plans for expanding across the country and has so far spent nearly $800 million on building an ultra-high voltage, alternating current (UHVAC) transmission line to send 5 million kilowatts of power across about 400 miles newly installed power lines.

This could be some much-needed good news for American Superconductor Corp. (NASDAQ: AMSC), which supplies a good deal of the high-temperature superconducting wire used in China’s expanding electricity transmission grid. The company is clearly in the pole position if State Grid can get its act together.

State Grid is trying to persuade the central government to support a plan to build out a nationwide network that could cost more than $8 billion and to get it built by 2015. Even in China, though, there are critics who pan the plan, saying it costs too much and can’t even live up to its promises in the current version.

The highest transmission level reached on UHVAC line is less than half its rated capacity, and even that only for a few seconds. Critics say it would be cheaper to mine and ship coal to power plants near population centers than to build more high-speed, long-distance transmission.

Critics could have a point. High voltage AC transmission has been tested in many countries, including the US, and with the exception of Russia, no significant build-out of UHVAC has occurred.

The problem dates back to Thomas Edison and Nikola Tesla. Long-distance AC transmission is less efficient than long-distance DC transmission. That’s the basic physics problem that State Grid has run up against, and for some reason the company doesn’t want to change. The most compelling reason for State Grid to stay with its UHVAC plan is that, if approved on a larger scale, State Grid could lock in national power distribution and regain its national monopoly on power transmission.

No matter what happens with State Grid, American Superconductor’s sales of its high-voltage wire should benefit.

Paul Ausick