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    Renewable Energy Stock Spotlight: Ascent Solar

    Ascent Solar Technologies Inc. (NASDAQ: ASTI) dropped 7% this morning, curtailing from a  9.9% surge in yesterday’s trading session on anticipations that the earthquake and tsunami in Japan and subsequent crisis at a nuclear power complex, as well as the high oil prices due to political turmoil in the Middle East could spurt the demand for solar panels. Moreover, the market worries that the government subsidy programs for renewable energy could be halted are now wearied out.

    ASTI shares lost 13.1% this year, mainly due to the lack of progress towards commercialization and failure to meet the previously declared objective of achieving full scale production at its FAB2 facility this year.  In addition, the fears that the solar industry could face a supply glut in 2011 took a toll on the company’s valuation. With a 52 week range of $2.00-$6.14, the March 15 trade is on the lower end of that range.

    ASTI manufactures thin-film copper, indium, gallium and (di)selenide (CIGS) PV modules  on plastic substrate, which provides unprecedented flexibility and lightweight advantages. The company’s technology easily integrates into a wide range of product applications, including roofing surfaces for buildings, portable electronic products, defense applications, space solutions, vehicles and more.

    Becoming the first high power flexible CIGS PV module manufacturer to receive the International Electrotechnical Commission’s “61646” certification, ASTI started to aggressively push into building integrated photovoltaic (BIPV) and applied photovoltaic (BAPV) applications for use in commercial, industrial and residential rooftop markets. As a result, the company announced a number of distribution agreements to expand the marketing reach and tap into the world’s most dynamic solar markets.

    The research company Nanomarkets has previously reported that BIPV applications are the fastest growing PV segment and are projected to grow by an annualized rate of 70% to become a $7 billion market by 2015. The market size by 2015 is expected to hit 500 MW, compared to 35 MW in 2010. The research company has also predicted that the BAPV applications are poised to grow 30% a year to reach 725 MW by 2015.

    ASTI’s 1.5-MW production line (FAB1) has been in production since 2009.  In July 2009, the company obtained independent verification by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) that the modules produced from FAB1 measured 10.4% in conversion efficiency. ASTI has also announced last December a peak efficiency of 12.1% for PV modules manufactured at FAB1.

    For 2010, ASTI generated approximately $2.5 million in revenue, including $1.7 million from government research and development contracts and $0.8 million from product sales. The company generated revenue of $1.5 million in 2009. The net loss increased to $31.2 million in 2010 compared to a net loss of $20.9 million in 2009. As of December 31, 2010, ASTI had approximately $44.8 million in cash and investments.

    The 30 MW production facility (FAB2) in Thornton, Colorado, is currently being commissioned with approximately 75% of the total equipment being delivered by December 31, 2010.  ASTI has estimated that it would need approximately $37 million to acquire the rest of the equipment and reach the projected production capacity.  The company entered 2011 with an annual run rate of approximately 2 MW at FAB2. ASTI is targeting 6 MW to 10 MW of production in 2011. With the production ramp up, the manufacturing cost per watt is expected to fall below $1.00.

    During 2010, the company applied for funding under the U.S. Department of Energy (DOE) Loan Guarantee Program for the planned 150MW FAB3 production line in Colorado. On February 28, ASTI announced that it moved closer to getting approval for loan aid as the DOE has selected it for the advanced due diligence review. The project has an approximate value of $375 million, $275 million of which could be under the loan guarantee program.

    We expect to see further appreciation of ASTI’s stock price due to a positive industry outlook; growing interest and visibility as a result of product certification; additional distribution agreements and opportunities; as well as increasing efficiency of CIGS modules and lower cost per watt as a result of production ramp up. In addition, the eventual granting of the DOE loan guarantee for 150-MW project has the potential to give a solid boost to ASTI valuation. However, the crowded market and oversupply threat could diminish the company’s potential, despite the promising technology.

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