Sharp and Italian electricity utility Enel plan to set up a number of solar-power plants in the coming years and are also discussing joing production of solar cells, Sharp said Thursday.

The power plants will mainly be located in southern Italy and operated by a joint venture that will be established in the first half of 2009. The two companies are targeting a total capacity of 189 megawatts by the end of 2012 and will invest about ¥100 billion (US$1 billion) into the project, Sharp said.

Additionally, Sharp, Enel and a second unnamed European manufacturing company are discussing construction of a solar cell factory in Italy and hope to sign a memorandum of understanding for a deal in December. Under current plans, the factory will start operations in mid-2010 and have an intial annual output of 480 megawatts of cells, but could grow to around 1 gigawatt in the future, Sharp said.

The Italian power plant project mirrors one the company is undertaking in Japan, but the Italian plan is on a much larger scale.

In June, Sharp said it will work with local power utility Kansai Electric to install panels on the roof of a new factory it is building to make solar cells. The Japanese project will initially generate around 9 megawatts of power with future expansion taking it to 18 megawatts. That's just under one-tenth the power of the planned Italian project.

A second solar plant planned by Kansai Electric will generate around 10 megawatts of power and the system installed on the roof at Google's Mountain View headquarters, which uses Sharp panels, can generate about 1.6-megawatts of electricity.

Solar panels are one of the industries Sharp has targeted over the last few years and the company has become a leading player but it faces fierce competition from companies including Germany's Q-Cells and China's SunTech.

In the April to September period this year, Sharp saw sales of solar cells jump 36 percent to ¥93 billion [b] and the business made an operating profit of ¥2.2 billion [b] against a loss in the same period last year. Sharp attributed the better results to growth overseas, higher production and stable prices of raw materials.

The IDG News Service is a Network World affiliate.