Egypt is to host a factory producing raw materials and gas used to generate solar energy, with $460 million of investments in total, state news agency Mena reported on Saturday.

Egypt is giving priority to boosting its renewable energy output and Investment Minister Mahmoud Mohieldin said he supports the project, according to Mena's article, which said the factory will be run by a Dutch company it did not name.

The new plant is expected to produce annually 3,000 tonnes of polysilicon, a key material in most solar cells, and 1,500 tonnes of a gas also used in the manufacture of cells.

Officials say Egypt's combined oil and gas reserves will last the most populous Arab country roughly three decades, encouraging a shift to alternative energy sources, including wind, solar and nuclear.

Solar projects in Egypt have lagged behind wind schemes, but the country's first solar power plant will start production by the end of 2010, Egypt's electricity minister said earlier this year.

The new project will also include a research unit on solar energy technologies. According to Mena the plant will be built on a 200,000 sq m site northwest the Suez Canal.

The country has strong solar energy potential due to low levels of rain and clouds, and year-round sun.

The North African country, an oil and gas producer, has been developing wind power along its eastern Red Sea coast, where it has wind farms at Zafarana and Hurghada, and has so far installed capacity of 430 MW of wind energy.

Egypt expects to see its wind power capacity reach 7,200 MW by 2020 and is boosting it to 550 MW by May.-Reuters