NRG Energy and eSolar will build a 92-megawatt solar thermal power plant in New Mexico, part of an effort to place 500 MW of solar power in California and the U.S. Southwest, the companies announced on Thursday.

They said the plant, on about 450 acres in southwestern New Mexico about 10 miles from El Paso, Texas, would open in the summer of 2011.

Announcing on Thursday its purchase of all power from the first commercial-sized solar thermal plant in New Mexico was El Paso Electric.

It will be a concentrating solar power plant, which uses mirrors to reflect the sun's heat to heat water. Steam from the heated water powers a turbine to create electricity in much the same way conventional power plants do. It is seen by many in the power industry as a more viable competitor to conventional power plants than photovoltaic solar panels because they can make more power in less space.

New Mexico Gov. Bill Richardson and New Mexico Senators Jeff Bingaman and Tom Udall endorsed the project. Bingaman is chairman of the Senate Energy and Natural Resources Committee.

Richardson signed legislation in 2007 setting a goal that by 2020 one-fifth of the power delivered in New Mexico would be generated by renewable sources including solar power. That goal is to come in steps -- 10 percent by 2011 and 15 percent by 2015.

ESolar builds its solar thermal plants in prefabricated modules, allowing them to be scalable, meaning they can be built in wholly contained increments, allowing for addition of more modules later.

It takes about 160 acres, or a quarter square mile, for NRG to place 46 MW of production.

NRG and eSolar in February entered into the agreement to develop the 500 MW of solar thermal power plants.

NRG, based in Princeton, New Jersey, has a retail power company, Reliant Energy, which serves about 1.7 million customers in Texas. NRG has more than 24,000 MW of generation capacity, which can serve about 20 million households.

Esolar, based in Pasadena, California, is an Idealab company founded in 2007 to develop and make scalable solar thermal power plants. In March, eSolar announced a deal with Indian energy and technology company ACME Group to build up to 1,000 megawatts of solar thermal plants over the next decade.

Also among eSolar's investors are Google Inc and Oak Investment Partners.

El Paso Electric is a regional electric utility distributing power to about 363,000 customers in a 10,000 square mile area of western Texas and southern New Mexico. El Paso has a generating capacity of about 1,643 MW. About 88,000 of El Paso's retail customers are in New Mexico.

(Reporting by Bernie Woodall; Editing by David Gregorio)

California Energy Solar energy Renewable energy