UPDATE 1-Japan looks to solar subsidies to boost industry

(Adds analyst comment, background)

By Mayumi Negishi

TOKYO, June 23 (Reuters) - Japan is poised to bring back subsidies for solar panel makers next year to maintain its lead in the industry, two officials at its Ministry of Economy, Trade and Industry said.

The Ministry of Economy, Trade and Industry (METI) will receive recommendations from a panel that is due to discuss clean energy on Tuesday, officials said.

The ideas discussed include subsidies and tax breaks that could halve the cost of putting up solar panels in households, one said.

"It's clear that lack of vision dented Japan's lead in market share," said the official, who asked not to be named as he was not authorised to speak to the media. "Japan has the technological advantage. But the measures would have to be drastic if we are to keep our lead."

Japan has watched domestic solar demand dry up after it pulled the plug on subsidies, hurting firms' ability to invest in research and expansion abroad.

Japan's decision to scrap solar subsidies helped Germany's Q-Cells AG (QCEG.DE) beat Japan's Sharp Corp (6753.T) to become the No.1 supplier of solar cells, while China's Suntech Power Holdings Co Ltd (STP.N) nudge out Kyocera Corp (6971.T) for third place, analysts said.

Japan, still the world's biggest supplier of solar cells, made a mistake scrapping solar subsidies in 2005, said Nomura analyst Tetsuya Wadaki.