– Japanese oil distributor Showa Shell Sekiyu KK (5002.T: Quote, Profile, Research) plans to build one of the world's biggest solar panel plants as it seeks new revenues amid weak gasoline sales, a source close to the matter said on Wednesday.
Showa Shell is considering a plan to spend roughly 100 billion yen ($943 million) to build a solar plant with an annual capacity of 1,000 megawatts, said the source, who spoke on condition of anonymity.
The plant, to go online in 2011, would be equivalent to solar capacity at a planned plant of Sharp Corp (6753.T: Quote, Profile, Research), which is trying to catch up to Germany's Q-Cells AG (QCEG.DE: Quote, Profile, Research) and become the world's biggest solar panel maker.
Showa Shell is betting on its solar cells that use copper and indium instead of pricey silicon, most commonly used in solar panels, and hopes to gain an edge over Q-Cells and China's Suntech Power Holdings Co (STP.N: Quote, Profile, Research).
The Japanese government aims to restart solar subsidies in 2009, and the oil firm is hoping strong domestic demand for solar power would help make up for sluggish sales of gasoline at home.
Showa Shell further plans to work with semiconductor equipment maker Ulvac Inc (6728.T: Quote, Profile, Research) on research to raise efficiency of the panels and extract more energy from them, said the source.
The two plan to spend about 7 billion yen to build a research facility next year, the source said.
Showa Shell currently has a solar panel plant with an annual capacity of 20 megawatts, and is building a second plant in Miyazaki, western Japan with an annual capacity of 60 megawatts.
No decision has been made on where the plant would be built, the source said.
The company said in a statement that it was considering raising capacity for solar panels and partnerships, but that nothing had been decided.
Prices of silicon have risen as investors put their money in an industry fuelled by state subsidies and tax incentives in Germany, Spain and the United States, as well as in Japan.
Japan's Sharp is also trying to wean itself from silicon by focusing on thin-film solar cells, which use a fraction of the silicon used in conventional solar cells.
Shares of Showa Shell closed the morning session up 1.3 percent at 1,194 yen after surging to a six-month high of 1,259 yen, against a 1 percent fall in the benchmark Nikkei average .N225. Sharp ended the morning session down 1.2 percent.
