Sharp plans joint solar venture with Enel

Reuters
Published: November 27, 2008

TOKYO: Sharp of Japan, Enel of Italy and a third manufacturer will invest more than $2.6 billion in Italian solar power ventures to tap growing demand for cleaner energy.
Top solar power firms are hurrying to expand capacity even as the sector smarts from a worsening global economy, which is drying up financing for new ventures and forcing smaller solar power firms to push back investment.
Sharp, the world's No.2 maker of solar cells after the German company Q-Cells, said it and Enel planned to spend about ¥100 billion, or $1.05 billion, to set up solar power generating plants in Italy with a total generating capacity of 189 megawatts by the end of 2012.
Sharp and Enel, with an unnamed third manufacturer, also plan to build a factory in Italy to produce thin-film solar cells, aiming for initial output of 480 megawatts in 2010 and ultimately raising output to about 1 gigawatt.
Sharp said total initial investment for the factory is likely to be at least ¥72 billion, and analysts expect that investment to more than double to more than ¥150 billion when the factory reaches full capacity.
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Sharp is stepping up investment in an effort to retake market share from Q-Cells, whose aggressive capital spending plans outstrip those of its rivals.
The consumer electronics maker is reinventing itself as a device maker, supplying or planning to supply liquid crystal display panels to Japanese TV makers like Sony, Pioneer and Toshiba.
Sharp will now sell equipment to the joint venture and charge fees for its technology and solar operations know-how in an effort to position itself in the solar power industry, its executive vice president, Toshishige Hamano, said Thursday. Sharp, which cut its annual profit outlook by one-third in October, could increase its sales in the short term by selling its technology and any equipment it develops in a joint venture with the semiconductor equipment maker Tokyo Electron.
But that could hurt its brand and deplete its technological edge in the long run, one analyst said. "With LCD prices sliding, Sharp is under more pressure to recover its initial investment quickly, and the temptation for a quick fix is understandable," said Yoshihisa Toyosaki, president of J-Star Global, an information technology consulting firm in Japan.
"But this raises the cost performance of rivals with lower personnel costs and government backing," he said. "It is not a strategy for a company with decades of experience and an established brand."
In the future, Sharp also plans to step up production of silicon wafers and join with a major U.S. polysilicon supplier to help it secure a steady supply of silicon starting in 2010.
Sharp first said it would take a 34 percent share in the solar power generating venture, with Enel holding the rest, but it later retracted the statement, saying that nothing has been decided, other than that Sharp will take a minority stake. Sharp will also take a minority stake in the solar cell venture.
Capital expenditure at Sharp, which also plans a solar plant in Japan at a cost of ¥72 billion with an initial output of 480 megawatts by March 2010, still lags that of Q-Cells, which has said it plans to raise capacity to 1,000 megawatts in 2009 and 2,500 megawatts in 2010.