The ACT Government has announced Australia's largest solar farm supported by a feed-in tariff will be built in the Territory's south.

Spanish-based company Fotowatio Renewable Ventures (FRV) will build the facility on 50 hectares near Royalla just off the Monaro Highway in Tuggeranong.

The 20 megawatt facility will be made up of 83,000 photovoltaic panels and produce enough renewable electricity to power 4,400 Canberra homes.

The project will cost ACT households an extra 25 cents a week or $13 a year. That is expected to decrease to around $9.50 by 2020.

FRV chief executive officer Rafael Benjumea says the company has extensive experience in solar power farms.

"We have built more than 350 megawatts all over the world, investing more than 2.5 billion Euros ($AUS 3 billion) in solar panels," he said.

Construction is due to begin next year and is expected to be finished in 2014, subject to environmental and planning approval.

FRV National Manager Andrea Fontana says the construction of the solar farm will have minimal impact on the environment of the chosen site.

"The good thing about this kind of [solar] plant is that the height is less than 2 metres with just a few plants or visual protections," he said.

"The impact would be almost non-existent."

Mr Fontana says the solar farm will produce about 37,000 megawatt-hours per year.

ACT Environment Minister Simon Corbell says it is an exciting new step in Canberra becoming a sustainable city.

"I think Canberrans will welcome this project," he said.

"This is about making Canberra the solar capital of Australia, it's about making the shift to renewables at a very cheap price, with a great saving in terms of greenhouse gas emissions and jobs and economic activity in our city."

Mr Corbell says the project will generate around 50 jobs during construction.

"The Government's reverse auction process is about getting the cheapest price for the best amount of renewable energy generation, and today we've delivered on that," he said.

"This will be the largest solar farm for the ACT, it will save our city over half a million tonnes of greenhouse gas emissions, and it's being done at a very cheap price for consumers."

The ACT Government says the solar farm will have an approximate reduction of 560,000 tonnes of carbon emissions over the 20 year life of the project, aiming to make Canberra a carbon neutral city by 2060.

Federal environment approval has already been given.