A Spanish company is planning to take a small parcel of desert southwest of Phoenix and turn it into one of the largest solar power plants in the world.

Abengoa Solar, which has plants in Spain, northern Africa and other parts of the U.S., could begin construction as early as next year on the 280-megawatt plant in Gila Bend.

It's a small, dusty town 80 kilometres southeast of Phoenix. The company said Thursday it could be producing solar energy by 2011.

Abengoa would build, own and operate the $1-billion plant, named the Solana Generating Station.

Arizona Public Service, the state's largest utility, would pay Abengoa $4 billion over 30 years for the energy produced, estimated to be enough to supply up to 70,000 homes at full capacity.

APS filed for approval of the plant with Arizona's public utilities regulator Thursday. The plant also hinges on an extension of the federal solar investment tax credit, which APS and Abengoa said they're confident will happen.

If approved, the plant will triple the amount of renewable energy APS produces. Now, about 1.5 per cent of the utility's energy comes from renewable sources.

Arizona regulators are requiring utilities to get 15 per cent of their electricity from renewable sources by 2025, with annual increases of roughly one per cent.

The Solana plant will bring APS to around five per cent in 2011, said Don Robinson, the utility's senior vice president of planning and administration.

Unlike most solar energy, Solana will use the sun's heat, not its light, to produce power.

Abengoa CEO Santiago Seage said the plant will use thousands of giant mirrors to harness the sun's heat. That will heat up liquids, which will spin turbines - just like coal or other power plants but without the pollution.

He said using heat will allow the plant to produce power even after the sun has gone down.

"We receive the heat from the sun and we use a fluid that becomes very hot. And we can keep it hot for a long time and release that heat for a long time," he said.

"It's like coffee. You can make it hot, keep it hot for a few hours and drink it anytime you want."

Arizona Gov. Janet Napolitano said she envisioned the state as a solar powerhouse.