Image caption The solar power plant planned for Arizona may be the biggest in the world

Nearly $2bn (£1.3bn) in loan guarantees will be given to two companies to kick-start the US solar energy industry, President Barack Obama has announced.

One of the firms, Abengoa Solar, says that it is planning to build the largest solar power plant in the world in Arizona.

Mr Obama said the projects would provide more than 5,000 new jobs.

The Arizona plant should power 70,000 homes and cut carbon dioxide emissions.

The money will come from government stimulus funds designed to boost the economy during the recession.

Outlining the "Solana" project at Gila Bend near Phoenix, Abengoa said it would have an area of 1,900 acres, using thermal storage-equipped parabolic trough technology, with 280 MW of power output capacity.

According to the company's website, 1,500 new jobs will be created during the plant's construction with 100 positions for staff to maintain it.

'Aggressive'

The second company, Abound Solar Manufacturing, will manufacture state-of-the-art thin film solar panels, the first time anywhere that such technology has been used commercially, the BBC's Jane O'Brien reports from Washington.

Plants will be built in Colorado and Indiana, creating 2,000 construction jobs and 1,500 permanent jobs, the Associated Press reports.

President Obama had promised during his election campaign for the White House to create manufacturing and construction jobs in the green power industry.

"We're going to to keep competing aggressively to make sure the jobs and industries of the future are taking root right here in America," he said on Saturday.

The renewable energy industry in the US faces tough competition from developers in China.

Mr Obama also acknowledged the loans would not be an instant solution.

Around 125,000 jobs were lost in the last month, the government reported.