Southern California Edison said Wednesday it has selected First Solar (NSDQ: FSLR) to supply a solar-power system for what it expects to be the world’s largest solar-panel project.

The utility in March first announced the installation, a 250-megawatt project that would distribute solar panels on 65 million square feet of commercial rooftops (see California to Get More Solar-Thermal). At that time, Edison had planned to begin installing the $875 million project in August.

But the company began installing First Solar panels on the first roof of the project Wednesday, according to the announcement. (According to a First Solar announcement also released Wednesday, the installation began Monday). The thin-film company won the contract, which is for only the first part of the approximately 150-roof project, in a competitive bidding process.

Once equipped with panels, the 600,000-square-foot commercial roof in Fontana, Calif., is expected to have the capacity to generate 2 megawatts of power – enough for approximately 1,300 average Southern California homes.

Edison expects to connect the first panels to its electrical grid in early September to help power the Inland Empire regions of Riverside and San Bernardino counties.

Aside from the 2-megawatt project, First Solar said it also is developing another project for Edison.

The California Public Utilities Commission last week approved an agreement for Edison to buy power from a photovoltaic plant that First Solar is building in Blythe, Calif., according to the thin-film company. The project, which the company expects to begin constructing in 2009, will have the capacity to produce between 7.5 megawatts and 21 megawatts of power.