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CANBERRA - For most Australians, the major source of energy emitted from the nation's capital is the hot air pumped out of federal parliament.

But Canberra may now become home to Australia's largest solar power plant, producing enough electricity for as many as 10,000 homes.

The Australian Capital Territory Government has announced a feasibility study for a massive bank of solar receptors to further reduce the city's carbon footprint and help meet new federal mandatory renewable energy targets.

But in the small parcel of land that encases Canberra, planners could have problems finding sufficient space, and analysts are already warning that renewable energy from the sun could come at the cost of higher power bills.

The city is likely to be undaunted.

Since self-government in 1989 the Territory has introduced a series of ground-breaking laws and initiatives although the most radical, such as euthanasia and self-injection clinics for drug addicts, have not survived more conservative federal parliaments that hold legislative veto.

Concern over climate change runs high in Canberra, and the local power utility, ActewAGL, already operates a scheme called Greenchoice that allows its customers to buy electricity generated from renewable sources.

So far this year 9000 customers have the more expensive Greenchoice option, reducing greenhouse gas emissions by an estimated 19,130 tonnes. The company says this is equivalent to taking almost 4500 cars off the road for a year. It has now joined the Territory's Government in commissioning a feasibility study into a solar plant of more than 30 megawatt capacity, larger than any other in the country.

If it becomes reality, it will join others in North America and Europe, where the technology is rapidly gaining popularity. A huge 64MW plant has been completed in Nevada, with as many as eight more planned in California and Florida. Spain is building three 50MW plants and is planning an additional 10.

ACT Chief Minister John Stanhope said it was crucial to explore all available options for large-scale projects capable of making a "meaningful contribution" to the reduction of greenhouse gas emissions.

He said a solar power facility generating sufficient electricity to power many thousands of homes and businesses could be one of the most effective ways of meeting reduction targets.

"The urgency of the challenge is certainly not diminishing over time and it is important that we make investments that deliver measurable and cost-effective inroads into our emissions targets," Stanhope said.

The study will determine the optimal size of a solar plant in terms of both initial capacity and potential expansion, compare existing technologies, and identify the environmental benefits likely to be produced.

It will also compare the cost-efficiency of a solar plant with mainstream electricity generation and any other potentially viable local sources of "green energy" generation.

The results will be handed to the Territory Government by July 1.

ActewAGL chief executive John Mackay said there was no better way for the ACT to help fight global warming than by producing its own renewable energy: "The [proposed solar] plant should initially be sufficient to supply solar energy to thousands of ACT homes, translating into a reduction of many tens of thousands of tonnes of greenhouse gas emissions."