Natcore Technology Inc (NTCXF)

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Natcore Technology: The New Era Of Solar Energy Aug. 27, 2015

http://seekingalpha.com/article/3471176-natcore-technology-the-new-era-of-solar-energy

Summary
•Natcore Technology has created a silver-free solar cell.
•The company has a couple of other technologies that will increase the efficiency of solar cells while decreasing their production costs.
•Natcore has several partnerships in place, but no revenues yet.
•Natcore's silver-free solar cells may be commercialised in 2016.
•Natcore has market capitalisation of slightly more than $20 million and potential to become a billion dollar company in the coming years.

Two weeks ago, I listened to an interesting interview with Brien Lundin. Although the interview was primarily focused on the gold mining sector, he mentioned a technology company that has immediately attracted my attention. The company is named Natcore Technology (OTCQB:NTCXF) and it has a huge potential to bring revolutionary changes into the energy sector.

Natcore Technology is a small technology company headquartered in Rochester, New York. It is focused on research of new solar cell technologies. The company owns 23 patents and another 36 patents are pending. Technologies developed by the company will have a huge impact on the global energy sector as they enable production of more efficient solar cells at lower prices.

The company has a couple of interesting projects in its pipeline. Some of them are more progressed (black silicone, low-temperature laser process), some of them are in earlier phases of development (quantum-dot solar cells). And the recent news is Natcore's silver-free solar cell.

Black silicone

Black silicone is a silicone with billions of nano-sized holes per square centimeter. The holes decrease the amount of light reflected back to the atmosphere. As a result, black silicone solar cells are more efficient than conventional solar cells. The dark color of the silicone is caused by the huge amount of nano-holes. It is estimated that black silicone may push solar cell production costs down by more than 20%.

Low-temperature laser process

Natcore has developed a low-temperature laser process to produce solar cells. The standard production methods include a high-temperature diffusion furnace. Particular components are added to the surface of the cell by melting them on in the furnace. As a result, a lot of energy is used and the cells may be easily damaged. Both of the disadvantages are eliminated by the low-temperature laser process. This process may be used for different solar cell technologies. It means that Natcore should be able to merge more of its technologies in order to maximise the final effect.

Natcore successfully applied its laser technology on the production of HIT-structure cells (HIT - Heterojunction with Intrinsic Thin Layer). The HIT solar cells are believed to be the near-term future of the solar industry due to their high efficiency. While conventional solar cells have efficiency mostly in the range of 15-20%, the world record for a HIT cell is 25.6% efficiency. However, production of HIT cells is complicated and expensive using the traditional methods, it is a much more simple process using Natcore's laser technology. The final production costs are expected to be in line with production costs of current commercial cells.

What is more important, Natcore's research of the HIT-structure cells resulted in development of a brand new solar cell structure that was said to simplify the production process, significantly lower costs and eliminate silver from silicon solar cells.

Silver-free solar cells

On August 18, Natcore announced that it used its proprietary laser technology to create a solar cell that doesn't use silver. The new solar cell is based on the all-back-contact silicon heterojunction cell structure. Due to its great electric conductivity, silver is traditionally used in solar cells to collect electrons and to form an electric current. Natcore managed to replace silver with aluminium, without any loss of performance. It is a revolutionary step as it may mean significant cost savings for solar cell producers.

According to Natcore, silver represents more than 48% of the metallization costs of a solar cell and approximately 11% of the total raw material costs of a solar module. A typical solar panel contains approximately 0.5 toz silver worth approximately $7.5. However, Natcore's new solar cells need twice more aluminum than silver in order to get the same conductivity, aluminum is approximately 300 times cheaper compared to silver. It means that eliminating silver should lead to a direct reduction of raw material costs by more than 10%.

Natcore intends to focus on optimization of efficiency of its new type of solar cells. David Levy, Natcore's Director of Research & Technology, said that high efficiency laboratory demonstrations will take place over the coming 2-3 months. A pilot demonstration is expected in early 2016, according to Levy:

“
We expect pilot demonstration in early 2016, and if successful, production availability at some time in 2016.

Quantum-dot solar cells

Quantum-dot solar cells are able to achieve significantly higher efficiency compared to conventional solar cells. While standard silicon cells have efficiency around 17%, Natcore was able to create tandem solar cell with 30% efficiency. An ordinary solar cell captures only a small part of the solar spectrum and transforms it into energy. But solar cells made of multiple quantum-dot cells (multijunction or tandem cells) are able to capture a bigger part of the solar spectrum. The first layer captures a part of the spectrum and the rest of it passes to the next layer that captures another part of it. As a result, the multijunction cell is much more efficient compared to the ordinary solar cell. Natcore was able to produce the multijunction solar cell using germanium.

Source: Natcore Technology

Natcore's Partnerships

Natcore has been developing partnerships with various companies in the solar business. Chuck Provini, president of Natcore claimed:
There are two companies, both out of Europe, that we'd be looking to have our joint ventures with. Because we will not be in the manufacturing business. We will be in joint ventures with people in the manufacturing business. We're trying to get them to build their facilities near our laboratory here in Rochester.

Natcore expects that its revenues will come from:
•license agreements
•royalties
•machine sales
•chemical sales

Back in 2013, Natcore signed a MoU with an Australian company Denzo Pty Limited. According to the MoU, Natcore and Denzo should create Natcore Australia, a joint venture that should produce solar cells and solar panels. According to an April 2015 interview with Chuck Provini (interview published on Seeking Alpha by Michael Allison), the project is in an advanced stage of preparation and Denzo has secured an approval to build solar cell facilities, solar panel facilities and a solar power plant. Natcore will be not only a partner in Natcore Australia but Natcore Australia will also pay royalties for the usage of Natcore's technologies and they will buy chemicals from Natcore.

In November 2014, Natcore established a turnkey solar manufacturing program named "Best of breed." Through the Best of breed program, Natcore will design, supervise and build facilities to produce solar cells, solar panels and solar power plants that use the best equipment and newest technologies. Projects under the Best of breed program will be managed by Natcore's advisory board headed by Dr. Danielle Margadonna. The advisory board consists of world-renowned experts on solar industry. Under the Best of breed program, Natcore is in discussions with Orange Energy, a company that intends to build a factory to produce solar cells and solar panels.

Natcore has also a joint development agreement with Eurotron. Eurotron is a Dutch manufacturer of equipment for production of photovoltaic modules. The companies work together on the development of HIT-structure solar cells. Natcore provides its laser process and Eurotron provides its back-contact cell technology.

In March 2015, Natcore and Frauenhofer Institute for Solar Energy signed a MoU under which they will cooperate in developing solar projects for third party customers.

Natcore's partnerships further support the growth potential of the company. The research partnerships have already resulted in some interesting results. However, a successful commercial partnership that will bring some notable revenues is needed, to push Natcore's share price significantly higher.

Risks and opportunities

The solar energy is expected to become a major source of energy in the future. According to EIA, solar power could become the world's largest source of electricity by 2050, as the capacity of the industry should grow to approximately 4,600 GW, from 154 GW in 2014. Although the estimates were made back in 2014, before the huge decline of oil and natural gas prices, the long-term prospects of the solar energy industry shouldn't be affected. Moreover, Natcore's technologies have the potential to decrease costs to a level, where solar energy will be competitive with other energy sources. Natcore seems to be at the right place at the right moment, the management just needs to prove its ability to turn the scientific success into a commercial one.

On the other hand, there are several risks associated with this company. Natcore has no revenues yet. It had only $550,000 as of December 31, 2014. The company needs money to continue its research activities and most of the money must be raised by issuing new shares. In January, Natcore raised $500,000 via a private placement. Another C$1.118 million ($888,000) was raised in April and $984,000 was raised in late July/early August. On August 6, Natcore announced that it had entered into an investment agreement with Dutchess Opportunity Fund II. Over a 36-month period, the fund will be required to purchase up to $10 million of Natcore common stock. Natcore will control the timing, amount of shares sold and the minimum price per share.

The share dilution will continue until Natcore starts to generate revenues. And it is yet unknown, when the revenues will start to pour. Natcore has been developing partnerships with companies in the solar business for a couple of years. But the successful partnerships are only research focused. There has been no production of solar cells or other form of partnership resulting in a direct revenue stream yet. Although management of the company claims that it is in advanced stage negotiations with several partners, there is no guarantee that they will be finished anytime soon. Given that Natcore Technology has a market capitalisation of slightly more than $20 million, any definitive deal will represent a major milestone for the company with the potential to push the share price higher by hundreds of percent. On the other hand, the current low market capitalisation means that Natcore may become an easy victim of market manipulations and that it may get acquired very cheaply.

Conclusion

Natcore Technology is an exciting company. It has developed a couple of technologies that may revolutionize the solar industry. Natcore's technologies have the potential to increase the efficiency of solar cells while decreasing their production costs. Natcore is worth only slightly more than $20 million, as the company hasn't been able to commercialise its technologies yet. Although investment in Natcore Technologies is risky, the opportunities far outweigh potential risks. If Natcore successfully develops and commercialises its technologies, the company may be worth billions of dollars in a couple of years.


Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.