Electric utility Southern California Edison on Thursday announced its intention to build what it claims will be the world’s largest solar cell installation—enough to power 162,000 homes.

The project will place photovoltaic panels, which convert the sun's rays into electricity, on 65 million square feet of roofs of Southern California commercial buildings and generate 250 megawatts of peak power.

“By doing distributed energy at this level it is on par with large-scale utility solar,” said Monique Hanis, spokeswoman for the Solar Energy Industries Association, a trade group. “You’re adding a third of [the total in the U.S.] with one project.”

There are about 750 megawatts of solar PV installations in the United States. These installations typically are placed on the roofs of homes and buildings and are generally less than 2 megawatts in size.

Because of the large number of small solar installations, they are widely distributed and close to where the electricity is eventually consumed, meaning new large, transmission lines aren’t needed.

But large solar installations of the size Edison is proposing traditionally have used concentrating solar technology located in rural areas where space is readily available—away from the homes and businesses that use the electricity.

Spain’s Abengoa Solar, for example, announced in February that it will build a 280 megawatt solar power plant near Phoenix, Arizona. The company will install rows of mirrors that focus the sun’s rays on water-filled tubes to produce steam to run turbines.

Edison—which still needs approval from the California Public Utilities Commission—plans to place its solar panels on the roofs of buildings in one of the nation’s fastest growing urban areas—San Bernardino and Riverside counties. The panels will be directly connected to the nearest neighborhood circuit.

Ron Pernick, principal at research firm Clean Edge, said the project is also important because electricity utilities haven’t traditionally financed solar projects. Most projects have been paid for by individuals who place panels on their roofs or by power generation companies who then sell the electricity to utilities.

“We’re starting to see the beginning of collaboration of different players and seeing how utilities can participate,” he said.

Edison estimates the total project will cost $875 million over five years. Once approved, Edison said it could install the panels at a rate of about one megawatt per week.

Dick Rosenblum, Edison’s vice president of generation, said the utility could have preliminary approval in two months and have 2 megawatts worth of panels installed by August.

Edison currently gets about 16 to 17 percent of its electricity from renewable sources, the largest being wind. Mr. Rosenblum said this solar project would add less than 1 percent to its renewable energy portfolio.

The state of California has called on utilities to produce 20 percent of their power from renewable sources by 2010.