Australia is to build the world's biggest solar power plant after the Hong Kong-based CLP power generating group announced on Monday that it would invest $270m in the project.

The 154MW scheme, located in the south-eastern state of Victoria, would have nearly twice the capacity of the biggest existing solar power plant, in California's Mojave desert.

The Mojave system, however, links nine power plants together for a total capacity of 354MW.

The Victoria project was conceived and planned by Solar Systems, an Australian private company, and aims to lower generating costs by using mirror arrays that track the sun to concentrate light on to advanced photovoltaic cells.

The project, which is scheduled to be completed in 2013 would generate enough electricity to power 45,000 homes.

However, that is equivalent to only about 0.1 per cent of Australia's electricity generation in 2006.

The cost of solar power has dropped by a factor of 10 in the past two decades, according to Christophe Inglin, managing director of Singapore-based solar panel specialist Phoenix Solar.

"But there is still a long way to go before it is competitive with grid [ie conventional] energy costs," he said.

Mr Inglin said that he expected some markets to achieve "grid parity" within the next five to 10 years.

CLP Group, which is making the investment through its Australian subsidiary TRUenergy, admits that solar energy is still expensive to produce but said that other factors meant the investment would be commercially viable.

The Australian federal government and the Victoria state government have given a total of A$125m ($115.5m, £59m, €78m) in grants to the project. CLP's investment will pay for the remainder of the construction costs, including a 2MW pilot plant.

The power plant, would produce zero greenhouse gas emissions, compared with an estimated 396,000 tonnes a year for a conventional power plant with a similar output. This difference in output would also generate tradeable emissions credits that would meet renewable energy targets set by the federal government.

In addition to the CLP investment in the project, TRUenergy is also investing A$40m for a 20 per cent stake in Solar Systems.

CLP has signed a 10-year agreement to deploy the technology in Asia Pacific.

Andrew Brandler, CLP's chief executive, said: "There is tremendous opportunity to transfer this solar technology into the Asia Pacific region because it has the potential to cost-efficiently generate electricity at scale with no greenhouse gas emissions."

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Satellite technology put to new use

● The plant in Victoria, Australia, will be the world's largest concentrated solar

photovoltaic power station

● It is nearly double the size of the largest individual US solar plant in California

● The 154MW plant will provide energy to 45,000 homes

● The technology, originally developed to power satellites, multiplies the power of the sun 500 times

● The dish has 112 curved mirrors that track the sun throughout the day