The 50-50 joint venture will spend roughly 20 billion yen (226 million dollars) to build a factory in Japan that can annually produce enough solar cells to produce electricity worth 80 megawatts.

The venture should have capacity of one gigawatt by March 2016 and two gigawatts by March 2021, when the companies estimate the solar cell market will be worth 10 trillion yen.

"The solar power market is showing temporary flat growth for now due to the global slowdown, but we expect the market to grow significantly in the medium- to long-term," Sanyo president Seiichiro Sano told a news conference.

The venture will initially target markets in Asia, the Middle East and Oceania.

It will also seek opportunities in industrialised countries, including the United States, where new President Barack Obama has stressed the need to protect the environment, said Shinji Nishio, president of Nippon Oil.

"We believe thin-film solar panels meet the needs of countries with significant land mass or deserts," Nishio said.

Environmentally-focused economic stimulus projects in major nations can also provide opportunities for the venture, he added.

The current global economic crisis should not pose significant problems, as the venture focuses on long-term projects, Nishio said.

"The current economic situation will eventually improve. We are not concerned about the effects of the current economic condition on the management of this company," he said.

Sanyo, which is being bought by its bigger rival Panasonic Corp., said it may seek funds from its future parent company if necessary for the project, although there is no immediate plan for Panasonic to participate.

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