LOS ANGELES, USA: The United States and China are in a head-to-head race to become the world's top market for solar power, and panel makers are wasting no time making plans to cash in on the growth promise of both markets despite the global recession.

At the Reuters Global Climate and Alternative Energy Summit this week, Chinese and U.S. solar companies including Suntech Power Holdings Co Ltd, SunPower Corp, Trina Solar Ltd and BrightSource Energy Inc laid out plans to capture their share of what is expected to be explosive demand for solar-generated electricity in the world's biggest and third biggest economies.

The U.S. and China lag far behind Europe in demand for solar power, but are expected to vault ahead in the next few years as both nation's work to curb their emissions of greenhouse gases that contribute to global warming.

This year, Washington and Beijing have both rolled out programs aimed at stimulating their fledgling solar power industries and boosting growth in their economies. Together, they are expected to drive the building of at least 5 gigawatts (GW) of solar installations between 2009 and 2011, according to a recent report by investment firm CLSA.

Thanks to strong government incentives, Germany is the world's biggest solar market and is expected to remain so until 2013, when the United States will become its equal. China will be slightly behind, according to research firm Lux Research.

In China, recently-enacted subsidies for utility-scale solar power projects has prompted a host of plans for solar power plants, including the announcement this week of the first major foray by a U.S. company into the Chinese solar sector by Tempe, Arizona-based First Solar Inc.

That announcement, said several U.S. companies, opens the door for other non-Chinese companies to compete in that nation's solar market.

"It clearly makes us more bullish on China," said Tom Werner, chief executive of San Jose, California-based SunPower, which already produces some of its high-efficiency solar panels in China. "We hope that that will result in us being able to penetrate that market as well."

BrightSource Energy Chief Executive Officer John Woolard also said the First Solar deal showed the Chinese were serious about solar, adding that his company was moving "slowly and deliberately" to find a partner in China. It expects to announce a Chinese partner, and one in India, in about a year, Woolard said.

No massive threat

First Solar's announcement also could quell complaints from some European solar companies that Beijing's support for its solar manufacturers was giving Chinese companies an unfair trade advantage over European and U.S. companies vying for market share in the global sector.

"If you announce that we have such a huge need for solar panels that we are even going to put First Solar panels into China, all of a sudden we've gone from this massive threat to maybe we saw it the wrong way around," said Stephan Dolezalek, managing director of Silicon Valley-based venture capital firm VantagePoint Venture Partners.

"Maybe we should see the size of the Chinese market as this enormous upside potential, and maybe all of solar should be seeing it much more positively."

In the United States, economic stimulus funds aimed at filling the funding gap left by the financial crisis have been slow to materialize this year.

Nevertheless, companies like Suntech and SunPower expect government funds to boost the market next year, with Suntech saying the U.S. solar market could triple in 2010 from about 350 megawatts this year.

"We do think the U.S. could be a very very strong market," Suntech Chief Strategy Officer Steven Chan told the Summit, adding that the Obama administration's loan guarantees and grants for solar "set the stage for a great 2010."

China's top solar company, Suntech, is setting up its first manufacturing plant in the United States and has narrowed the potential locations to Phoenix and various cities in Texas, said Chief Strategy Officer Steven Chan. It plans to start production at the 50 MW plant in the second half of 2010.

SunPower, also said it would start producing solar panels in its home country next year to be closer to major solar markets like California.

"In terms of megawatts it will represent a meaningful amount of our panel production, say up to a quarter of our total panel production," Werner said.

Even smaller Chinese companies are wading their way into the U.S. market.

Trina Solar, a solar panel maker based in Changzhou, China, is actively seeking partnerships with project developers in the United States so it can take part in what is already a competitive race to rack up contracts for big solar projects.

"Honestly, we lag behind," Trina Chief Financial Officer Terry Wang said.

"First Solar and SunPower got a good start because they are located in the U.S. We are not bidding (on projects) yet. We would like to do it."