Power company AES Corp. (NYSE: AES) and private equity firm Riverstone Holdings said Monday they have teamed up to pour up to $1 billion into a joint venture focused on developing largesolar-electric projects around the world.

The two companies will each fork out up to $500 million over five years for the newly minted company, AES Solar, which will own and operate "utility-scale" solar installations. The company said the installations would range "from fewer than 2 to more than 50 megawatts," and would directly feed power into the electrical grid.

The news highlights a heated solar-industry debate about whether photovoltaic technology, which converts the sun’s light into electricity, or solar-thermal technology, which uses the sun’s heat instead, makes more sense for large projects (see Solar Desert Debate Heats Up and Q&A: Schott Talks Solar-Thermal).
 
Both photovoltaic, known as PV, and solar-thermal approaches still have something to prove to the large-scale market, said Travis Bradford, president of the Prometheus Institute and a Greentech Media partner.

For example, storing electricity so that it’s dispatchable -- or available when needed -- is still an issue for PV, Bradford said.

Solar-thermal might have an advantage here, he said, because heat can be stored more easily than electricity, but it faces greater financial risk because it only is cost-effective at large sizes -- so the installation sizes are bigger, and more expensive, right from the beginning.

"It’s unclear today which one is the ’best’ solution," he said, adding that a range of technologies potentially could meet the needs of the utility-scale market.

As for AES Solar, Arlington, Va.-based AES and New York-based Riverstone said the new venture initially plans to start projects in countries offering the most attractive tariffs, then will expand as its costs decline.
 
AES’s shares grew slightly on the news, rising 4 cents or 0.25 percent, to close at $16.17 per share. Company shares grew another $0.16, or 1.03 percent, to $16.34 per share in after-hours trading.