The solar industry is the home to some of today's most innovative and cutting-edge technology, and as time goes on, newer and more efficient advancements continue to revolutionize the market space. The evolution of the sector makes the solar industry a potentially lucrative field for investors to capitalize upon, and several unique opportunities are waiting to be seized by both investor and company, alike. One of these intriguing investment opportunities points straight to Ascent Solar.
Ascent Solar Technologies Inc (OTC:ASTI), a business rooted back to 2005, is intent on bringing its breakthrough photovoltaic technology to the solar market spotlight. Notably, and to the testament of ASTI's focus, industry experts recognize this technology as a potential leading application for the solar industry, placing ASTI in a favorable position to take advantage of their developed technology and become a leader in the evolution within the solar market.
CIGS Technology Is The Difference
Ascent Solar is focused on the development and promotion of their cutting-edge CIGS (Copper, indium, gallium, selenide) photovoltaic technology on flexible, plastic substrate. These panels are designed to convert sunlight into electric power by laying a thin layer of the elements above onto a plastic backing. And, as a leader in the CIGS field, Ascent is the only manufacturer in the world commercially producing CIGS solar on a plastic substrate with monolithic-integration, a key differentiator that sets them ahead of the pack for selected sector use.
Through the utilization of CIGS cells, the solar modules designed by Ascent allow for maximum efficiency and durability while minimizing weight load – a combination that has the potential to revolutionize the ways solar panels can get utilized in everyday applications. Because CIGS has a higher sunlight absorption coefficient than other semiconductor materials, a much thinner layer of film is needed for the panel to function, allowing for the use of a flexible plastic substrate. In effect, this gives the technology the best power-to-weight ratio relative to its competitors, which opens up the possibility of use in situations where weight is a significant constraint. For example, the high-voltage, low current module makes the technology suitable for both space and aerospace travel, and ASTI has focused a particular emphasis toward the drone industry, where ASTI believes a substantial opportunity is in play.
While competitors continue to focus on residential and industrial solar ambitions, ASTI has dedicated their research and development to improve advanced CIGS technology further and capitalize on its potential uses. More specifically, the flexible and modular applications of ASTI's technology allow for Ascent to target specialty and high-value markets that are unable to make use of traditional solar panel solutions. These advantages create a significant opportunity for ASTI for two reasons. First, the company faces much less competition from standard solar power companies, whose products lack the functionality and durability of the ASTI product.
Second, facing an industry that is more attentive to function over cost, ASTI has been taking steps in recent years to develop both their products and their business model to best meet the needs of emerging industries reliant on innovative solar energy products that must meet selected and product specific requirements.Niche Focused Toward Drone/UAV, Space, And Military Applications
In the face of a highly saturated solar market, ASTI has placed their focus on innovative and specialized products that can fulfill the more specific needs of niche markets. As the cost and availability of fossil fuels continue to be volatile, industries are being pushed to find a more modern and reliable replacement. The military, government, public sector, and disaster relief markets are all examples of markets that are actively looking for lightweight and dependable solar technology that can withstand rugged environments and rough handling. Currently, these sectors are often forced to use heavy and bulky batteries to fuel essential devices, and ASTI believes their lightweight solar technology is the perfect solution to solve this ongoing issue. For instance, batteries have been shown to be the third heaviest item a soldier must transport, behind the other essentials of water and fuel. Instead of heavy and bulky batteries, ASTI's solar technology provides a superior option that serves as a portable and rugged solution that allows the military to efficiently power and charge various devices.
The company has also emphasized its focus on the disaster relief market, which is expected to offer significant opportunity for ASTI's products to impact that market with unique applications.Secondarily, the benefits from the CIGS technology brings the ability to deliver portable, durable and naturally powered energy to consumers and rescue teams, where ASTI can enjoy the benefits of a lesser-saturated market space unreachable by traditional solar. Third, ASTI has placed a high priority on developing solar technology for the aerospace sector, inclusive of drones, aircraft, and even spacecraft. Solar powered solutions have always been of significant interest to the aerospace industry, and with ASTI's CIGS technology, the company can out-perform and out-class many of their competitors. For example, the thin and flexible nature of CIGS enables the panels to be directly integrated onto the wings of drones, UAVs, and other aircrafts without causing any extraneous weight or bulk. Not only does this allow for cleaner and renewable energy in these aircraft, but it also eliminates the need for bulky and often power restricted batteries to fuel the unit.
Finally, ASTI aims to capitalize on their extensive list of possible applications by catering to more niche and specialized markets, working closely with individual companies to design a product that best suits their unique needs. Clearly, with ASTI's modern CIGS technology, there exists significant opportunity in providing solutions to companies and industries that were previously unable to make use of solar power in an amenable fashion; ASTI has taken many of the right measures to set themselves up to capitalize on their strategic initiatives.
A Shift in Focus
While it may be true that ASTI's share price recently hit a historical low, merely looking at the stock valuation isn't an objective way of valuing the company as a whole. Additionally, there is a reason that ASTI has been able to remain in business since 2005, while many of their competitors have been forced to declare bankruptcy. As a historical side-note, during the late 2000s, the solar industry began to fall victim to certain difficulties that stifled the growth of the market, leading to a cutthroat competitive landscape that only the well-established and forward-thinking companies could survive. The PV module price per watt, for instance, was at nearly $6/watt throughout the 2000s, and by 2015, this figure had dropped to a minuscule $0.50/watt due to efficiency improvements, as well as energy dumping by predominantly Asian countries. As a result of this sharp and unexpected loss of revenue, companies that did not quickly adapt to the evolving market space saw market share and future potential evaporate.
Many of the companies that went bankrupt during this time made the same fatal mistake: while working with second-generation thin-film solar technology, they chose to keep focusing on large-scale utility and rooftop applications, which forced them to compete in the same market as traditional c-SI solar. Of course, it was impossible for second-generation companies to compete with glass-backed solar technology in this sector, as the older technology could accomplish the same results at a significantly lower cost to buyers. ASTI realized this, however, and in 2012 began shifting their business model to differentiate themselves from the oversaturated utility markets and better highlight the advantages their CIGS technology had over first-generation products. The shift in focus allowed ASTI to separate themselves from the competition and is one of the primary reasons why the company has lived through these industry struggles and sits well-positioned for future success.
Rather than attempting to compete with c-SI solar, ASTI decided to focus on their strengths by targeting specialty, high-value PV applications. The shift is significant because not only are these sectors unreachable by traditional c-SI solar panels, but industries such as military and aerospace are known for having a high barrier to entry, a hurdle in which ASTI has already cleared. Where ASTI may prove their leadership capability is in these unique markets, where the functionality and durability often take priority over the cost of the product, and by operating in a more limited market space, ASTI has a much higher chance of recording substantial sales revenue and build partnership opportunities. And, with second-gen products going for $5-$50/watt, the profits are far more fruitful than the $0.50-$2/watt garnered from traditional applications. To reap potential rewards, ASTI has branched off from commodity-based pricing in favor of a value-based pricing model, effectively shifting the sales model from $X per watt to $Y per unit or solution. Not only does this make pricing clearer for consumers, but it also allows ASTI to work with companies on a case-by-case basis and negotiate pricing.
ASTI Is Charged Up
Having survived through the challenges brought on by a crowded industry, ASTI is ready to begin their climb back into the spotlight and show investors why their current valuation deserves a closer look. Due to dropping below the NASDAQ $1 price requirement, many in the institutional and retail investment space overlook the inherent value in ASTI, ignoring the IP portfolio, the sizable assets, and opportunities that the company is engaging.
First and foremost, the company currently owns a manufacturing facility in Thornton, Colorado that has an estimated worth of over $11 million. Second, the company has put over $300 million into research and development since their establishment in 2005, a testament to their meticulous design process and dedication to their craft. Through this development work, ASTI now has over 40 patents (granted, allowed, and filed) under their belt, all of which relate to their globally-recognized technology and manufacturing processes. This type of IP portfolio is made possible through over a decade of dedicated effort from the team at ASTI, and any emerging company with aspirations to enter the same specialized markets as ASTI would likely face rigorous obstacles and lack both the time and money needed to build a product that could compete.
Not to mention, high-value markets such as military and space travel often come with much longer sales cycles when compared to the more generalized markets, meaning that the majority of contracts would be not only lucrative but exclusive to the company that secured them. Recognizing that value proposition, ASTI has placed their business focus into four strategic verticals, which is expected to pay accretive dividends within the next few years.
First, and not neglecting the obvious, the company plans to enter the consumer portable power market to take advantage of the near $7 billion industry. With high-powered smartphones and other devices often requiring portable batteries to remain charged throughout the day, a growing demand has emerged for portable solar to replace these batteries. And, to support and take advantage of this demand, ASTI has recently partnered with PowerKeep to develop a line of solar panels for the upcoming Energizer® PowerKeep solar products.
Simultaneously, ASTI has secured a partnership with Silent Falcon, an unmanned aerial system manufacturer also headquartered in the US. The flexible and monolithically integrated CIGS in production makes for an easy solution that allows for a notably extended flight time. By combining solar into the wings of Silent Falcon's airship, 30%-50% more flight time can be added to missions with a minimal impact on the craft's weight and aerodynamics. The partnership has been successful for the two companies, establishing ASTI's name as a reliable and competent company within the industry and opening doors to future business ventures.
ASTI also has detailed plans to enter the military sector through various applications of its portable solar technology, inclusive of portable chargers for Android Tactical Assault Kits and other military devices, as well as unattended ground sensors that can increase ISR efficiency while substantially reducing the risks taken on by operators. ASTI participated in the US Special Operations Command (SOCOM) invitation-only Technical Experimentation Event held during the summer of 2017, a prestigious event that gave the company's solar solutions exposure to military officials.
Finally, ASTI has been selected by the Japan Aerospace Exploration Agency (JAXA) for further evaluation of their superlight CIGS solar cells for deep space missions. The selection is the first ever substantive contract awarded for a high-altitude application, and will undoubtedly jumpstart the company's foray into space applications should the venture prove successful.
ASTI Is Maturing Quickly
ASTI may indeed be trading at a discounted price, but there are many factors specific to ASTI's niche focus and market opportunity that can quickly contribute to a far higher valuation than what is currently represented. The value, to those who understand valuation metrics, is easy to recognize. The company has been in business for over a decade and has proven its ability to overcome the struggles of the cutthroat solar industry. Not only that, it is deeply seeded in a specialized sector with high barriers to entry. And, although investors should accept that valuations may not skyrocket overnight, they should also be cognizant of the fact that any newly secured partnerships could prove hugely beneficial to the company's market cap.
Combining the sum of the parts, ASTI already has the research, product portfolio and IP base in hand, and have carefully set themselves up for a fair chance at becoming the breakout company in their targeted initiatives. All things considered, investors that are willing to have some patience in Ascent Solar may end up finding it very much worth their while.
The author has no shares in any stock mentioned herein nor plans to open any positions within the next 72 hours.
This article was originally featured on CNA Finance.