Natcore Technology: Next in Solar?

Natcore Technology: Next in Solar?
by Danny Deadlock

Investors in solar stocks know that, to date, the story of the industry has largely about government support.

Without grants, feed in tariffs and tax breaks many producing solar panels and ancillary equipment simply would not exist today. The solar industry has a well documented history as a solution that is desirable in concept, but too expensive to be practical.

Those investors who ignored solar for these reasons, however, missed out on one of the brightest wins in a generation. First Solar (NASD:FSLR) IPO’d in November 2006 at $24.50 and soared to over $300 a year and a half later. The reason? First Solar was the first solar company to bring its cost of manufacturing below a dollar a watt. For the first time, this had some speculating that solar energy could, ultimately, compete with coal in a free market.

With technology beginning to make a serious impact on the cost of production, I believe solar is one of the best growth opportunities in the alternative energy space. But those perusing the sector may find it tough, as I have, to identify good small and microcap companies.

Natcore (TSXV:NXT) may not be the next First Solar, but I believe its technology makes it an extremely compelling candidate. Natcore’s technology originates from Rice University in Texas, where it has one of the most advanced nanotechnology research departments in the world. The films and processes Natcore plans to move into commercial production promise to have significant impacts on solar cells, semiconductor devices, optical and optoelectronic components, prescriptive and protective eyewear, and energy-saving architectural coatings, among many other uses.

Last May, Natcore was granted a patent for its liquid phase deposition technology. The company believes this technology will replace expensive vacuum based furnaces with a silicon dioxide-based film that is grown in an environmentally friendly chemical bath.

Natcore may singlehandedly allow the solar cell industry to reduce silicon wafer thicknesses by up to two-thirds – an advancement that will dramatically improve throughput and profit margins. This, in turn, could lead to the mass manufacturing of tandem solar cells with twice the efficiency of the best solar cells available today. Until very recently, these tandem cells have been producible only under lab conditions, and at very high costs.

On the implementation side, I believe Natcore is ready to hit the ground running. In June the company formed Natcore China, a new company that will be 55-per-cent owned by Natcore Technology, with the remaining 45% shared by the Zhuzhou hi-tech industrial development zone, a government-supported zone in Hunan province; and Chuangke Silicon Ltd., a major Chinese producer of polysilicon. They expect that first product shipments will be made within months. The company will derive revenue from license fees and selling the equipment and supplies to large scale manufacturers.

Increasing evidence suggests Natcore’s business acumen may be matched by their luck with regards to timing. The Chinese government recently announced a massive solar energy producer plan designed to fast track the country into becoming a world leader in the space.

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of Cantech Letter. Cantech Letter is is not a registered investment advisor or broker dealer. All content is provided for information and educational purposes only.

Danny Deadlock is the Publisher of MicroCap.com where he conducts research and publishes reports on various companies and industries. Danny Deadlock also offers MicroCap Premium which is published throughout the week by email and includes more in-depth research on stocks in their portfolio, new picks throughout the month, and broader market commentary & forecasts.