Dyesol Ltd (ASX: DYE) is currently at the very forefront of developing technology to harness solar power.

As the most abundant, consistent and cleanest power source available to us, much hope has been put in the ability of science to develop the technology to capture, convert and store the power than the sun has to offer us.

Listed on our market since late 2005, Dyesol has long hoped to deliver on the promise of Dye Solar Cell technology. In the heady days of pre-GFC excitement, shares in Dyesol went from a low of just over $0.20 in early 2006 to a high of $2.35 in August 2007 before beginning what was to be a relatively constant slide to a low of just $0.17 earlier this month, for a 93% loss.

The technology, if it can be reliably commercialised, may hold some promise. Described by the company as akin to ‘artificial photosynthesis’ and has potential to be used in lower light conditions than traditional solar panel technology. Impressively, it can be used in place of glass, to increase the surface area over which the panels can collect solar energy.

There’s no question, the technology is impressive in concept, and we’d all prefer cleaner energy and lower pollution. The question for investors is whether Dyesol can effectively commercialise the technology to provide a return for shareholders.

A technology in need of business

The company has partnered with some impressive players, who all seem interested in the potential of the company’s dye-sensitised solar cell (DSC) technology, but as yet, the uptake hasn’t been sufficient to create consistent shareholder returns. Of course, there are also competing solar and other technologies (clean and otherwise), so even if the technology can be commercialised, there’s no way of knowing what proportion of the market Dyesol can capture.

In fact, the business has shown growing losses each year of the last five, from $3.6m in  2007 to $17.3m in 2011. It’s perhaps unsurprising then to see Dyesol raising more capital through a shareholder purchase plan.

I have no doubt that the company’s technology works, or that it is has some exciting potential. However, neither the company nor investors know the size of the eventual market or what (if any) technologies are current being developed or will be developed in future that may usurp Dyesol’s position.

Foolish take-away

There are no shortage of promising businesses that never quite make it for one reason or another.

From an investing perspective then, a stake in Dyesol can only be considered speculative – not for lack of effort from the company, but simply because of the uncertainty inherent in its business. In such a case – and in the case of many a speculative miner and biotech hopeful, buying shares is little more than pure speculation.

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Scott Phillips is a Motley Fool investment analyst. You can follow him on Twitter @TMFGilla. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

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