Energy company AES on Tuesday said it will partner with private equity firm Riverstone Holdings to invest up to $1 billion to build large solar power plants around the world.

The joint venture, AES Solar, aims to develop, own, and operate “utility scale” solar installations to be connected to existing power grids. Each company will provide up to $500 million over five years into the project.

“Because of its scale, this joint venture has the potential to change the fundamental economics of solar power,” Ralph Alexander, a managing director of Riverstone Holdings, said in a statement.

AES said the installations would range from 2 to more than 50 megawatts in size and would use photovoltaic panels. One megawatt can power about 250 typical American homes.

The joint venture told the Washington Post that it would first build solar plants in Europe and Asia, where government incentives are most favorable for renewable energy.

AES said it would look to expand elsewhere once “appropriate market incentives” were in place.

Solar photovoltaics are expected to grow from a $20.3 billion worldwide industry in 2007 to $74 billion by 2017, according to research firm Clean Edge. Annual installations were close to 3 gigawatts worldwide last year.

The cost of solar photovoltaic panels has been dropping in recent years, but without subsidies they are still more expensive than conventional fossil fuel-based power generation and other renewable sources like geothermal and wind, according to Clean Edge.

Arlington, Virginia-based AES is one of the world’s largest power companies with operations in 28 countries. Twenty percent of its global power generation comes from renewable sources. New York-based Riverstone Holdings has invested more than $8 billion in the energy industry.