Natcore winning over weary Canadian Solar investors

Shares of Natcore (TSXV:NXT) are on the move today after closing a private placement that injects some much needed working capital into the US based producer of solar cell equipment.

Natcore will use the money for general working capital, but also to fund what it says are “requests for solar cell manufacturing facilities in the United States and abroad.”

With its story of a cleaner, cheaper solar technology and an increasingly polarized political environment surrounding solar after the US House and Senate recently passed a bill that prevents the Defense Department from buying Chinese-made solar panels, Natcore may be winning over weary Canadian solar investors. Those investors have watched Toronto’s Timminco collapse under a veil of secrecy about their technology and Waterloo’s Arise Technologies fall from a high of $2.53 on April 11, 2008 to mere pennies today as the losses, which are frighteningly predictable in the solar sector, piled up.

Pockets of international markets, such as Germany, are experiencing an absolute boom in the use of solar energy, so much so that the government has begun to cut subsidies to the industry.

But solar energy in the United States has become an increasingly contentious, hot-button issue – one that may have the United States on the verge of a trade war with China. The rise of China as the world’s dominant solar producer, the country accounted for at least half the world’s production last year, has confirmed long-held beliefs for many; that solar production in North America is too expensive and the production process, which uses components such as the gas sulfur hexafluoride, has a greenhouse effect “equivalent to that of 25,000 tons of carbon dioxide” might not be that green either.

Natcore’s technology, which is licensed from Rice University in Houston, replaces the traditional chemical vapour deposition method with a wet chemistry process. This removes the need for silane, which is highly toxic and flammable. Natcore can also use the waste materials from the initial production of the silicon wafers or from the production of semiconductors, thereby allowing facilities currently using the chemical vapour deposition method to potentially lower their cost of goods.

The Company has clearly aimed for transparency, describing the scientific processes of their patent-pending technology in detail in press releases and even bringing on Rice’s Andrew Barron, who has over 350 peer-reviewed scientific papers to his credit, into the newly created role of Principal Investigator. All this attention to detail means investors are treating Natcore as a Solar 2.0 of sorts. It’s likely, however, that the company will need to demonstrate an ability to produce revenue quickly to maintain their momentum. The trail of under performing Canadian solar stocks, which includes Timminco (TSX:TIM) Arise (TSX:APV) plus Burnaby’s Day4 Energy (TSX:DFE), and Victoria’s Carmanah Solar (TSX:CMH), has demonstrated that investors in this sector can fast grow impatient with money losers.