Tuesday, August 20, 2013

If You Can't Beat 'Em, Move On

The solar industry struggles as a glut of solar cells and modules keeps retail prices below levels that will deliver a profit.  That is not a problem for solar power technology developer Dyesol (DYSOY:  OTC/BB).  The Australia-based company has moved on to better technologies where the cost dynamic is more favorable.  Dyesol has developed a product line of dyes, inks, electrode materials and substrates used in photovoltaic applications based largely on pioneering research completed in Switzerland in the late 1980s.

The dye solar cell is also called the Gräetzel cell for one the the Swiss scientists who invented the technology.  It is a type of thin film semiconductor composed of a photo-sensitive anode and an electrolyte.  Unlike conventional solar cells built on silicon and telluride substrates with deposition-type processes, the dye solar cell is made using conventional  -  and far simpler  -  roll-printing techniques.  The materials needed to make a dye solar cell are readily available and low-cost.

Dyesol has Michael Gräetzel on their technology advisory committee, but they have not relied on past achievements alone.  The company has a string of twenty patented technologies of their own with more patent applications pending.  This is particularly important from a competitive standpoint, since dye solar cells have one big drawback.  While cheap to make, they are not as efficient in converting the sun’s rays into energy.  Earlier this year Dyesol announced a breakthrough achievement of 14.1% efficiency in its solid state dye solar cells.

The dye solar cell is third-generation solar technology, bringing to mind laboratory benches and scientists squinting into microscopes.  However, the Dyesol website is set up to take orders from a menu of products from dyes to glass substrates to inks.  That corporate confidence has helped bring revenue into the company.  Despite the fact that sales activity in the most recent quarters has thinned, Dyesol reported a total of AUS$1.2 million in sales in the year ending June 30, 2013.  Total cash usage in that period was AUS$4.3 million.

There are better times on the horizon  -  at least if Dyesol management is successful in negotiations underway with Tata Steel Europe.  Tata is planning to use steel roofing and building facades in the UK that are ‘enabled’ with Dyesol’s solid state dye solar cells.  These are known as Building Integrated Photovoltaics (BIPV).  The July 31st deadline built into a collaboration agreement between Tata and Dyesol has come and gone, but Dyesol management has maintained that is no impediment to working with Tata.

Dyesol is also in a joint venture with Pilkington North America for glass products that would be used in new construction.  It has been over three years since the two companies announced a collaborative effort for BIPV products, particularly architectural glass that would provide insulating as well as energy-generating properties.  Pilkington was supposed to use Dyesol’s dye solar cells with their one glass coated with transparent conductive oxides.  Management has been more circumspect about this relationship, which some investors might read as “nothing accomplished.”  Yet with the economy ‘grinding’ forward rather than growing, it is no surprise that it is taking longer than expected.

Investors can find a quotation for Dyesol shares on the U.S. over-the-counter market under the symbol DYSOY.  Its shares also trade on the Australian exchange under DYE.  By appearances, it is not a cheap stock at US$8.02 on the U.S. OTC/BB (each U.S. listed American Depository Receipt represents 20 shares of  Dyesol's common stock).  However, in Australian dollars on the Australian exchange, a price of AUS$0.46 per share at least looks more like an option.  The stock traded as high AUS$0.57 over the last year (current exchange rate is AUS$1.00 to US$0.90).

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.



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