LOS ANGELES - PG&E Corp will build and operate a wind power project of up to 246 megawatts with the U.S. unit of Spain's Iberdrola SA, marking the utility's first foray to own wind generation.

PG&E said on Thursday that it expected to invest just over $900 million in the project. That figure includes the cost for Iberdrola Renewables to develop and build the system.

The proposed project would cover about 7,000 acres in the Tehachapi area of Eastern Kern County in Southern California.

The news marks the first move for PG&E to build and own wind power generation and follows Iberdrola Renewables' plans to spend billions on renewable energy facilities in the United States through 2012.

California utilities are working to meet state targets that a third of its electricity come from renewables by 2020.

Earlier this year in February, PG&E said it would develop up to 500 MW of solar power projects and own up to half of the solar generation, in its first direct investment in renewable generation in more than a decade.

During the financial crisis, funding for renewable projects dried up, but utilities have been a bright spot since they can claim a 30 percent tax credit for building installations.

The news from PG&E should be welcome to the U.S. wind power industry. Wind power has been one of the fastest growing sources of renewable generation, but the credit crisis slowed its expansion.

New installations in 2008 made the United States the top wind generator in the world, but in 2009 new additions have slowed and China is expected to take the top spot.

Shares of PG&E were up 1.09 percent at $43.78 on the New York Stock Exchange at mid-afternoon. Shares of Iberdrola closed at 6.45 euros on Thursday.

(Reporting by Laura Isensee; Editing by Bernard Orr and Richard Chang)

California Energy Renewable energy