LOS ANGELES California utility PG&E Corp said on Tuesday it signed contracts to buy up to 900 MW of solar thermal power from plants that will be built in the next few years.
The contracts with privately held BrightSource Energy Inc could ultimately power up to 630,000 California homes.
Raymond James analyst Pavel Molchanov said in a client note the deal was "almost certainly the largest solar purchase agreement in world history ... The PG&E news is another major example of solar adoption."
The move is part of PG&E's push to comply with California's requirement that at least 20 percent of its electricity supplies come from renewable sources by 2010.
"Solar thermal energy is an especially attractive renewable power source because it is available when needed most in California -- during the peak mid-day summer period," said Fong Wan, vice president of energy procurement at San Francisco-based PG&E.
Solar thermal technology is different from photovoltaic solar panels in that it uses heat from the sun to generate steam that powers turbines to produce electricity.
The first three contracts are for 500 MW of solar power, which will be supplied from three solar thermal plants, the company said. The first 100 MW plant could be operating as early as 2011 in Ivanpah, California.
PG&E's announcement comes a week after FPL Group Inc filed an application with California regulators to build and operate a 250 MW solar thermal plant in the Mojave Desert.
Molchanov said the increasing acceptance of solar power by utilities such as PG&E and FPL was "bullish" for publicly traded photovoltaic solar companies, including Evergreen Solar Inc, JA Solar Holdings Co Ltd, SunPower Corp, Suntech Power Holdings and Trina Solar Corp.
PG&E shares were up $1.26, or 3.4 percent, at $38.08 in afternoon trading and FPL shares were up 3.3 percent at $64.82 on the New York Stock Exchange.
(Reporting by Nichola Groom, editing by Leslie Gevirtz/Andre Grenon)