Under the deal, eSolar will provide China Shandong Penglai Electric Power Equipment Manufacturing Co. the technology and expertise to build solar "power tower" plants over the next decade, with a total capacity of 2,000 megawatts.
The initial project, which includes a 92-megawatt solar power plant to be built this year, will be located in the Yulin Energy Park, a booming area for renewable energy in Shaanxi province.
China Shaanxi Yulin Huayang New Energy Co. will own and operate the first projects. Penglai Electric will manage the power plants' construction.
eSolar's technology uses fields of mirrors called heliostats to concentrate heat from the sun onto a water tank suspended on a tower. The intense heat vaporizes the water, and the resulting high-pressure steam drives an electricity-generating turbine.
While the power tower concept already exists, eSolar uses a sophisticated software system and imaging technology to control the mirrors.
For its standard 46-megawatt power plant, eSolar uses 176,000 small mirrors. The software positions the mirrors to create a virtual parabola to focus the sun on the receiver tower.
The deal also includes the construction of biomass power plants to generate electricity when the sun sets.
The solar and biomass plants will share turbines and other infrastructure, reducing the projects' cost and allowing continuous electricity production, according to Bill Gross, eSolar's chairman, The New York Times reports.
"That supercharges the economics of solar," Gross told the Times, noting that the addition of biomass generation will allow power plants to operate at 90 percent of capacity.
The sand willow, a local shrub grown in the surrounding region to fight desertification, will supply fuel for the biomass power plants, according to Penglai Electric.
"We chose eSolar because of its demonstration in commercial maturity, sustainability and long-term potential to compete against fossil fuel," Eric Wang, a Penglai Electric spokesman, told The Los Angeles Times.
Nathaniel Bullard, a solar energy analyst with consulting firm Bloomberg New Energy Finance, told The Los Angeles Times the eSolar deal indicated China was moving aggressively to pinpoint technologies around the world that could help it meet its ambitious renewable energy goals.
"If you're identified by China as a leading technology developer, the technology will be imported with the implication that your technology will over time become local," he said. "You effectively have one stakeholder, the government, which makes development much easier."