Canberra households will pay an extra $13 a year to make the national capital Australia's solar energy epicentre with the ACT government revealing plans for a vast power farm to be built in the south of the territory.

Spanish firm Fotowatio Renewable Ventures (FRV) has signed a deal with the government to build the 50-hectare complex, Australia's biggest solar project, on rural land off the Monaro Highway at Royalla south of Tuggeranong.

Environment Minister Simon Corbell said FRV were the lowest bidders in the ''reverse auction'' process used to select the firm to build the farm, which will contain 83,000 solar panels, and sell the power to the government.

Royalla will produce 20 megawatts of power each day, enough to power about 4400 homes at a price of 18.6c per kilowatt-hour, about three times the cost of energy produced using coal-fired power.

Mr Corbell said the cost would be passed onto consumers and be capped at no more than $13 per year to each Canberra household.

The venture will easily be Australia's largest solar project, dwarfing a 10-megawatt park planned by the Western Australian government for the Perth region.

Local power retailer ActewAGL, which is part-owned by the ACT government, and had already identified a site at nearby Williamsdale for its bid, lost out in the reverse auction process.

Mr Corbell said the project was the fulfilment of a promise made at the 2008 election and would avoid the release of more than half a million tones of greenhouse emissions.

''We will accrue all the renewable energy certificates from this project meaning that Canberra will take credit for over half a million tonnes of greenhouse gas abatement during its life,'' the minister said.

''The plant will be up and running by early 2014, the company expects the plant to commence construction late next year.

The government believes there will be no repeat of 2008, when plans for a gas-fired power station in the Tuggeranong area were thwarted by a group of local residents.

Mr Corbell said the location of the plant, on privately leased farmland off the Monaro Highway, was not subject to specific environmental concerns and was several kilometres away from residential areas.

FRV chief executive Rafael Benjumea said his company had built more than 350 megawatts of generation capacity all over the world.

The plant will employ about 50 people in the construction stage but Mr Benjumea said that it could be operated while in production with a workforce of just five or six.

The owners of the Royalla land, local couple John and Patricia Pini, declined to be interviewed yesterday.

John Grimes of the Australian Solar Council said his group agreed with Mr Corbell that ''big solar'' had arrived.

''This is great news for solar in Australia,'' Mr Grimes said.

''The ACT government is leading the way nationally, delivering the largest solar power at the lowest cost anywhere in the country and this is something that governments elsewhere will want to emulate.''