One of the largest privately-owned conglomerates in China is poised to become a big investor in Spain's booming solar energy sector, joining other foreign and domestic players in the latest investment craze in Spain.

Chint, a big electrical engineering group with some $2bn in annual sales, told the Financial Times it was planning to take stakes in a number of solar farms and in a factory that makes solar panels in Murcia, in southern Spain. The factory and farms will use Chint's technology.

"Spain at the moment offers some of the best conditions in Europe for investment in alternative energy," Nan Cunhui, Chint chairman, said in an interview. "We see Spain as the ideal base to develop our solar energy unit for the whole of the Mediterranean basin."

"These technologies are starting to take hold in countries such as Italy, and in northern Africa, so there will always be room to grow," Mr Nan said. He added his long-term goal was to create an integrated European energy group based in Spain.

In addition to Chint, German, Austrian, Israeli, British and Japanese groups are also piling in to Spain's heavily subsidised renewable energy sector.

The Spanish government offers generous incentives for investments in renewable energy because it is trying to rein in the country's carbon emissions to meet its Kyoto protocol target by 2010. Rapid economic growth and a huge influx of immigrants have led Spain's carbon emissions to shoot way past its Kyoto target.

With government-guaranteed prices offering solar energy producers annual returns of up to 15 per cent, the installed capacity of solar panels has risen 10-fold since 2005. The Spanish energy ministry estimates €2bn ($2.92bn) has been invested in this sector.

In some regions, such as sunny Castille, solar energy licences are auctioned for huge sums, sometimes changing hands several times in one day, according to lawyers involved in the transactions. German companies - the solar energy leaders in Europe - advertise in Spanish newspapers offering to pay the holders of government permits €600,000 per megawatt of installed capacity.

Spain is already a world leader in wind energy, which accounts for about 12 per cent of the country's installed capacity. But solar-powered electricity production is tiny. Germany, with far less sunshine, produces nine times more electricity from solar panels than Spain, according to industry associations.

That is set to change. The installed capacity of solar panels is expected to reach 500MW by the end of this year and double that by 2010, when it will represent about one per cent of total electricity generating capacity in Spain. The government hopes renewable resources, including wind, solar and biomass, will produce 12 per cent of Spain's electricity needs by 2010.

In addition to price guarantees, the solar energy boom has been reinforced by new legislation that obliges all new buildings to have solar panels on their roofs. José Luis Rodríguez Zapatero, the prime minister, has set an example by installing solar energy panels on the grounds of the 17th century Moncloa palace, his residence.