Japan's Sharp Expects Boost from Solar Energy

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In January, Japan introduced a subsidy for solar panel equipment; by the end of the year the government is expected to launch a 10-year program to let consumers who have solar panels sell surplus electricity to utility companies at double the price that companies do. The goal, say officials, is to have renewable sources supplying 11% of the country's energy by 2020, up from 5.9% in 2005.

Gunning for Overseas Rivals

But the bigger opportunities are overseas. The key for Sharp, analysts say, will be to improve its technology to stay ahead of low-cost producers in Asia. Sharp is shifting to so-called thin-film photovoltaic cells where it's an industry leader. They aren't as efficient at converting sunlight into energy as the conventional crystalline-silicon type; however, they can be made faster using a fraction of the silicon, and are more suitable for power facilities where Sharp is angling to make an impact.

Of course, technology hasn't prevented Sharp from losing ground against rivals. Germany's Q-Cell passed Sharp as the world's top solar cell producer three years ago. The key to Q-Cell's surge was Germany's introduction of a feed-in tariff system that let consumers sell any excess electricity from their solar panels to the local utility company, which helped consumers recoup the cost of the panels quicker. These days, Suntech Power (STP) has put China on the map as the emerging global powerhouse in solar panels. A similar thing happened in flat-panel TVs. Sharp was the world's dominant producer of LCD sets in 2000, but it now trails rivals Samsung Electronics and Sony (SNE).

Katayama's worry that governments could treat solar energy like oil might never materialize. Currently, solar energy makes up a mere 0.4% of global electricity capacity. The International Energy Agency predicts that all renewable energy technologies will account for just 10% of global energy demand by 2030. Still, Katayama isn't taking any chances. "Every country will have a different approach to energy security and the environment," he says. "We have to adapt."

Hall is BusinessWeek's technology correspondent in Tokyo.

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