Solar gear makers climb on Japan's green ambitions

TOKYO, June 23 (Reuters) - Japan is poised to provide subsidies and tax breaks for solar panel makers next year to maintain its hold on the red-hot industry, two officials at its Ministry of Economy, Trade and Industry said.

The news drove up shares of makers of solar equipment on Monday on expectations that the measure would further spur demand for green energy.

Japan, the world's top maker of solar cells, is home to solar equipment suppliers such as Ulvac Inc (6728.T), which jumped 7.8 percent, NPC Inc (6255.T), which rose 6.2 percent and SES Co Ltd 6290.Q, which rose 15.7 percent.

However, shares of major solar cell and panel makers Sharp Corp (6753.T) and Kyocera Corp (6971.T) remained mostly unchanged, as the two have already said that it would be difficult to expand production beyond previously announced plans even if demand increases.

Tight silicon supply is limiting solar production capacity at Japanese solar cell makers for the next two to three years, executives have said.

A senior official at the Ministry of Economy, Trade and Industry (METI) said the ministry would receive "urgent recommendations" from a panel that is due to discuss clean energy on Tuesday.

"It's clear that lack of vision dented Japan's lead in market share," said another 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."

The Nikkei reported on Sunday that the panel would propose plans that could halve the cost of putting up solar panels in households.

Japan pulled the plug on subsidies for solar panels for homes in fiscal 2005, causing domestic demand to shrink just as the sector was heating up. Japan's solar cell companies have since fallen behind in the pace of capacity expansion and silicon procurement.