(FORTUNE Small Business) – Iraqi insurgents blow up oil pipelines. Crude prices soar to $50 a barrel. The snows of Kilimanjaro recede, a reminder of the threat of global warming. Childhood asthma, aggravated by tailpipe and power plant emissions, rises dramatically. It's little wonder that a new generation of entrepreneurs believes that clean alternative energy—geothermal, hydrogen, solar, and wind—may finally turn into a serious business.

We've heard that promise before, only to be disappointed. Jimmy Carter's synfuel project flopped in the 1970s. In the 1980s the government poured billions into the black hole of fusion. In the 1990s solar energy amounted to little more than an expensive toy for tree huggers.

Will it be different this time? It seems so, mainly because sometimes-fuzzy green sentiments are getting support from the cold arithmetic of commerce. Advances in nanotechnology and electronic controls are driving down the costs of alternative energy even as prices of fossil fuels climb. According to the Solar Energy Industries Association in Washington, D.C., solar power alone has grown into about a $5-billion-a-year global industry and is expanding at an annual rate of 40%. Bill Gross, whose solar company, Energy Innovations, is featured in this issue, asserts that alternative energy is "a multitrillion-dollar opportunity. It dwarfs the size of any business in history."

In Silicon Valley hydrogen, solar, and wind power are being talked about as if they were the next Internet. Although clean energy represents a relatively small chunk of venture capitalists' portfolios, it is growing briskly. According to the San Francisco venture capital firm Nth Power, investments in clean energy in 2003 reached $481 million, or 2.4% of all venture money invested, up from 1% in 2000. State governments are also getting busy. Last year California announced it would invest $1.5 billion in environmental technologies. And in November, Colorado passed a law mandating that 10% of its energy must come from wind and solar power by 2015. That makes 18 states, including California and New York, that have now passed environmentally friendly energy standards.

As in every industry, from autos to aeronautics to infotech, most of the breakthroughs come from entrepreneurs. (Think Henry Ford, the Wright brothers, and Steve Jobs.) So FSB scoured the country to find small firms that are leading the green energy revolution—and look likely to profit from it. In this special report you'll read about Konarka, a leader in making solar cells as thin as photo film; Roofscapes, which boosts energy conservation by growing grass on the roofs of buildings; and Changing World Technologies, which generates energy from, of all things, turkey carcasses. For their stories and more, please read on.