Dear Reader,

Whatever your disposition and experience might be regarding solar energy, one thing is clear: Solar energy is a little bit magical. Solar cells and panels convert sunlight to electricity. With little effort, the electricity keeps getting generated, for use immediately or for use later. It's renewable, clean, quiet, safe, passive and inoffensive – and solar panels keep delivering for 20 – 30 years or more with very little maintenance or added costs.

Likewise, solar panel manufacturing is a little bit magical. By combining common materials – silicon, phosphorus, boron, silver, aluminum and others – suddenly, the sun's light delivers electricity, and keeps delivering electricity.

Solar stocks can also perform magic for their shareholders. Since the beginning of this year, the solar sector has been one of the top-performing sectors. The two solar stock ETFs, which consist of portfolios of solar stocks, are representative:

Most energy analysts believe that this magical performance is not a fluke, and will continue for years, citing the anticipation of strong growth, globalization, efficiencies of scale and persistently high oil and electricity costs around the world.

Representative of this view is a research report issued by Deutsche Bank on July 31 this year which stated:

"We believe the solar sector is at an inflection point and industry fundamentals are likely to improve further into 2014...The sector has passed the tipping point for grid parity in more than ten major markets worldwide and will likely maintain this momentum even with elevated poly [polysilicon] prices.

"As module [panel] prices stabilize around $0.60 - $0.70/W [watt], levelised cost of solar electricity without subsidies is now 10 – 20 c/kWh [cents per kilowatt hour] in several major regions of the world. Rising electricity prices, a need for competitive generation sources and lowered balance of system costs will drive further improvement over the next several years....

"Despite the strong year-to-date performance, we believe the solar rally has legs. Demand outlook is improving due to strong demand from Japan, China, US and other emerging markets. The supply situation is also a lot better in our view...."

Briefly, according to EPIA, the European Photovoltaic Industry Association, the solar sector grew on average by 35%/year from 2000 through 2012 with total cumulative installed capacity rising globally from 1,400 megawatts in the year 2000 to 102,156 megawatts (102 gigawatts) by the end of 2012. Europe was the driver for growth over this period, accounting for 70% of installations and growth.

The solar sector endured a hard downturn that lasted from Q4 2011 through Q1 2013, with solar panel overcapacity causing reduced pricing for panels, and a severe mini-recession in the industry which bottomed in February and March this year.

Solar Sector Growth Projections

The industry is expanding again now with the European growth rate declining, and with substantial installation growth rate increases in China, in North America, in the rest of Asia including India, in the Middle East, in South America and in Africa. The solar industry is going global, and is anticipated to maintain a +15% annual growth rate moving forward, according to an average of leading industry projections, even as developed country governments are moving away from subsidies for the sector.

Examples of this growth from the events of the last quarter include the following:

But First, Problem One: Inefficient Solar Cell Manufacturers

To effect ongoing high growth – to effectively compete head-to-head with oil, natural gas, nuclear, hydro and wind energies, that is, to attain grid parity over broad regions – the solar sector must now pull out all stops and deliver at a viable cost for residential, commercial and industrial electrical applications. Thus far, solar cell and solar module (panel) manufacturing has been a case of a rapidly growing, but inefficient and unsophisticated market, and this period is ending by necessity.

All manufacturing activities, not just solar cell production, go through a similar process in which the effective producers learn to automate their production lines, learn to control the factors yielding qualified final products during the process and place automatic control systems directly in the manufacturing process, inline, so that qualified and profitable products are produced more than 95% of the time. This has been shown to be true with the paper industry, steel industry, pharmaceutical industry, semiconductor industry, and straight down the line for all manufacturing sectors.

Automated, real-time, inline process-control instruments effectively confirm the potential of each solar cell at each turn in the production line, thereby maximizing yields and lowering costs. It is simply impossible to manually qualify the billions of solar cells – at every turn of the production process – that are now being produced each year. This factor highlights the importance of Aurora's achievements for the sector.

It should be noted that solar cells are semiconductor devices. They share many of the same processing and manufacturing techniques as other semiconductor devices including computer chips and memory chips.

Solar Sector Collaborations for Change

More than 85% of large-scale commercial solar cell factories today make crystalline silicon solar cells. This is the industry-dominant technology targeted by Aurora's process controls. Solar sector experts are fully aware of the profitability issues, including the need for better yield in the industry's factories. Aurora's measurement system and control technology specialists collaborate with major solar manufacturers, with the University of Alberta – and its internationally recognized research leaders in materials and process control – and with the International Solar Energy Research Center Konstanz in development of the company's measurement and automation equipment.

ISC Konstanz, based in Konstanz, Germany, is ranked among the top research institutes in the world undertaking research in solar energy material, cells and panels. The Center has 50 employees dedicated to reducing the costs and increasing the efficiency of solar energy systems.

As manufacturing industries mature, specialized engineers and scientists develop the instruments that go inline and the computerized systems for process control that become an integral and ongoing part of the manufacturing process. Such a team of engineers and scientists has been brought together at ACT Aurora Control Technologies by CEO Gordon Deans, and they have developed and perfected the systems that will bring solar cell and solar panel production into the modern age with 90% or more qualified, profitable, energy-converting cells and panels as the final product. This equipment is being integrated into solar manufacturing equipment and production lines now – and measurement systems are being shipped starting this year.

Considering the breakthrough consequences for solar manufacturers' bottom line from reduced raw materials, reduced labor, and more consistent final results, the revenue expansion capability of ACU is anticipated to be exceptional. Along with the energy analysts who recognize the potential threshold improvements for the sector, we recommend that you get Aurora on your radar screen right away.

Advanced Process Controls

Regarding the use of continuous inline measurement in manufacturing, one of Intel Corporation's most senior manufacturing technology engineers stated the following:

“I can certainly speak to the semiconductor industry where inline measurement is common. Much measurement equipment that was standalone is now integrated into the process tool. Integrated control, feed forward control and data mining are common. These comments are true for Intel. Most [competitors] haven't yet figured out how Intel makes money. Intel focuses relentlessly on yield (die yield and wafer yield)...High yield equals high profits. You need inline metrology to get to high yield and to improve bin splits = high asking price (more profit).

As long as there has been manufacturing, there has been process control engineering, and the weekly and monthly tweaking and tooling of every manufacturing process. For a company like Aurora to specialize, as outsiders and consultants, in the inline equipment to qualify every key step of the solar cell and module production line requires top-quality professionals.

And this is the calling card of Aurora – the results-oriented process controls specialists for solar manufacturing. CEO Gordon Deans, earlier a product development and research engineer and senior manager for Nortel Networks and a senior executive for Adept Technology Inc., a leading industrial robotics firm, has assembled the singular team that is qualified to make the efficiency breakthroughs for the solar industry.

Short Introduction to the Aurora Team

Gordon Deans, M.Eng., P.Eng., President & CEO – Aurora Co-founder. Public company executive officer (Adept Technology, Norsat), Nortel/Bell-Northern Research, 31 years of international engineering, sales and business development experience in high-tech;

Steve Blaine, B.A.Sc. (Eng), Vice President, Engineering – Aurora Co-founder. SVP Engineering at Sierra Wireless, 34 years of experience in new product development and delivery;

Mike Heaven, Chairman, B.Sc. (Eng), P.Eng., MBA, Chairman of Advisory Board – Aurora co-founder. Honeywell/Measurex (VP Engineering, GM), 10 patents in industrial measurement and control;

Thomas Schmidt, Director – PV Experts (Chairman), Q.Cells SE (COO), CSG Solar. Extensive international experience in solar cell manufacturing line design, construction and operations;

Kenneth Cadien, Ph.D, P.Eng., Professor, Materials Engineering, U. of Alberta – Intel Fellow Emeritus, IEEE and NRC National Institute for Nano-Technology Fellow, Canada Research Chair in Nanofabrication, leader in thin films and semiconductor manufacturing; 33 patents in semiconductor manufacturing.

In short, in gathering the ideal team for designing, patenting, constructing, testing, installing and servicing the equipment that can set the international standard for solar manufacturing – to include maximizing the profitability of the manufacturers – Gordon Deans and Aurora have done it. This is the reason the global solar manufacturing equipment suppliers are coming to Aurora for integrating the process control instruments into their machinery for solar cell producers.

The Magnitude of the Opportunity

The company has the potential for first revenues by the end of this year or soon thereafter, with an increasingly meaningful portion of a targeted annual market of $520 million – the size of the solar production measurement and control equipment business – which is anticipated to have a compounded annual growth rate through 2016 of 12%.

Get to know and follow Aurora now, before the share price is bid up by the successes to follow.

Aurora's Success Model

Aurora has adopted and is executing the highly successful business model of Measurex Corporation, and is applying it to the solar energy industry. Measurex's success with inline measurement systems and process controls for the paper industry led to its merger with Honeywell Corporation in 1997 at a value of $600 million. Aurora's chairman, Mike Heaven, was a lead engineer and was instrumental in developing and marketing Measurex's successful products. The company went public with a market cap of $100 million on revenues of $8.5 million, and grew to annual revenues of $254 million with 2,250 employees in 30 countries.

Measurex's real-time quality-control model has served as a major influence for several industries as they have matured.

The Solar Panel Manufacturer's Dilemma

Because of Aurora's collaborations with solar manufacturers, manufacturing equipment suppliers, and industry researchers, the company is aware that, without inline process controls, every manufacturer struggles with the trade-off between yield and throughput in their production lines. High yields of top-quality product can be readily achieved at low production volume, but as production line volume (throughput) is raised, unwanted variations in the manufacturing process play an increasing part, reducing the average product quality so that the yield of top-quality solar cells declines as a percentage of total production.

To maximize the profitability of the manufacturing process, both the line throughput and the yield of top-quality product must be high. Without inline process measurements and controls, this cannot occur. This is the same need as has been seen and dealt with in semiconductor manufacturing and other industries.

Outlook

ACT Aurora Control Technologies Corp. is in an enviable position in the solar sector. First, because of its high-level research and development collaborations, the company is already well recognized by solar cell and panel producers. Now, with the company's controls instrumentation being adopted and integrated by both major solar cell factories and by manufacturing equipment suppliers, its benefits are starting to be recognized inline, at leading production facilities. Next comes major revenue growth; and by the time these numbers are jumping off the page for all investors and analysts, astute investors will already be well positioned.

Start to follow this company and its growth now as the solar sector is globalizing and evolves to new levels of effective yields and throughput.