UPDATE 3-M'bishi Elec to invest $550 mln to lift solar output

(Recasts with company announcement, adds details, comments)

TOKYO, Aug 27 (Reuters) - Japan's Mitsubishi Electric Corp (6503.T: Quote, Profile, Research) plans to invest 60 billion yen ($549 million) to quadruple its solar battery production in four years to meet growing demand for renewable energy.

Spain and Germany are cutting subsidies for solar power, but Mitsubishi Electric and rivals such as Sharp Corp (6753.T: Quote, Profile, Research) and Kyocera Corp (6971.T: Quote, Profile, Research) are betting on growing solar power demand in the United States given high oil prices and fears about climate change.

Japan's solar market is also expected to grow, if modestly, with sources saying that the Ministry of Economy, Trade and Industry plans to seek 23.8 billion yen for subsidies for residential solar panels [ID:nT366231].

"I wouldn't be surprised if the U.S. solar market passes Europe's in a few years," said Aiji Suzuki, who heads Mitsubishi's production facility Nakatsugawa Works. "In Japan, growth will be a little slower without something like Germany's feed-in tariff system."

"Depending on the size of the subsidies, the domestic market might just grow by a double-digit percentage in three to four years."

Shares of Mitsubishi Electric were up 1.3 percent at 935 yen during afternoon trade, outperforming the benchmark Nikkei average's .N225 0.2 percent fall.

Demand for renewable energy such as solar cells and shrewd procurement of silicon gave companies like Germany's Q-Cells AG (QCEG.DE: Quote, Profile, Research) and China's Suntech Power Holdings (STP.N: Quote, Profile, Research) market share at the expense of companies like Mitsubishi Electric, which was bumped down six notches to 12th place in 2007.

The company plans to spend 22 billion yen to lift annual capacity at its solar plant in Nagano Prefecture from the current 150 megawatts to 220 megawatts in October.