Solar Millennium drops 60% on Thursday on strategy change

Aug 19, 2011 - Shares in German solar power firm Solar Millennium (ETR:S2M) hit a record low on Thursday, plunging by over 60% after the decision of the company to shifts its focus from concentrated solar power (CSP) plants to smaller photovoltaic (PV) arrays.

By 1308 CET the share had pared some of the loss and was trading down 47.43% to EUR 4.080 on the Xetra platform. On the floor of the Frankfurt Stock Exchange its was down 46.65% to EUR 4.241 at 1322 CET.

The sharp fall was caused by the news that CEO Christoph Wolff plans to equip its first two 250 MW projects with PV modules instead of using CSP technology in the form of parabolic trough power plants. This way the company was responding to changed market conditions in the USA featuring better prospects for PV plants that do not require storage, the CEO said in a company statement today, adding that PV prices have dropped drastically lately.

The company, which is saddled with long-term debts of some EUR 250 million (USD 357.9m) and struggling with losses, said the new strategy is supposed to secure sales and earnings.

The strategy change will have a great impact on the Blythe project in the Californian desert meant to be the world's largest solar power plant. As a result of the changed technology, Solar Millennium will not be able to use the billion-dollar guarantee granted by the US government and will have to secure new financing. The Blythe project was the main pillar of support for Solar Millennium's stock.

(EUR 1.0 = USD 1.432)

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