Showa Shell Sekiyu plans to spend about 100 billion yen ($944 million) to build a manufacturing plant capable of producing a whopping 1 gigawatt of thin-filmsolarpanels per year, according to the Nikkei.

The Japanese subsidiary of Royal Dutch Shell hasn’t officially announced the news or released further details, but Forbes reported Wednesday that the company confirmed it is considering building a large-scale solar plant.

Showa entered solar production last year with its first solar-cell plant, which has a production capacity of 20 megawatts. In August, the company said it would build a second factory with the capacity to produce 60 megawatts.

A gigawatt of capacity would be a significant leap. To put it in perspective, global solar-cell production reached a total of 3.7 gigawatts in 2007, according to the Prometheus Institute, which forecast that thin-film solar production would reach 1 gigawatt this year. Germany, the largest solar market, installed just over 1 gigawatt of solar capacity last year.

It’s not the first super-sized thin-film plant in the works, but it is the latest sign that companies plan to dramatically expand the size of the market.

Sharp Corp. in November said it is building a 1-gigawatt thin-film plant in Japan. Meanwhile, First Solar – the No. 1 thin-film manufacturer today, which makes cadmium-telluride films – plans to reach 1 gigawatt of capacity by 2009, and Oerlikon and Applied Materials have announced orders for amorphous-silicon-making equipment that amounts to another gigawatt of capacity (see Thin-Film Solar Production to Leap Forward).

According to Showa Shell’s Website, the company makes solar panels from copper, indium and selenium (CIS).

CIS is based on some of the same elements as the copper-indium-gallium-deselenide films that competitors such as Nanosolar, Miasolé, HelioVolt and Global Solar are developing. CIS films are easier – and potentially cheaper – to make than CIGS, according to Solid State Technology, but they also convert sunlight into electricity less efficiently.

A study by the National Renewable Energy Laboratory in 2005 reported a record efficiency of 15 percent for CIS cells, meaning the “champion” cell was able to convert 15 percent of the sunlight that hit it into electricity, under laboratory conditions. That compares with a record-breaking CIGS cell with 19.9 percent efficiency that the lab announced in March.

Thin-film solar technologies use little or no silicon, a potential advantage given today's worldwide shortage of solar-grade silicon.

Cadmium-telluride films, led by First Solar (NSDQ: FSLR), make up the largest portion of the thin-film market, followed by amorphous-silicon films.

Other thin-film companies, such as Miasolé, HelioVolt, Nanosolar and Global Solar, are pushing hard to grab a piece with CIGS. But so far, none of the CIGS companies has managed to reach mass-market production.

Rick Hanna, an equity analyst for Morningstar, said the timing of Showa’s news is interesting, as it comes a week after reports that Japan is considering bringing back solar subsidies (see Japan Wants to Resurrect Solar Incentives).

Hanna said government subsidies could catalyze demand in industries like solar. But he also doesn't think Showa's plans to build a 1-gigawatt plant is a game changer.

"It's one thing to announce big capacity, but it's another to have it on the floor," he said.

Showa has a lot of challenges ahead, including raising financing for such a large plant and facing plenty of competition as more companies enter thin-film.

"They are joining a crowded party," he said.

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