Given the low interest rates and plummeting prices for solar energy equipment, it would seem a good time for investing in solar power generation. GE Energy Financial Services, for one, has been pursuing solar deals actively and on Wednesday it announced a $100 million equity investment in a solar power plant in Arizona.

The investment helps close the financing of the $550 million, 127-megawatt project being developed by LS Power, which also lined up debt financing from Prudential Capital Group, Banco Santander and others, GE said. LS Power has hired Fluor Corp. as a general contractor and operator of the project, which is set for completion in 2013 and will supply power to San Diego Gas & Electric under a long-term agreement. The project, called Arlington Valley Solar II, will rise about 40 miles west of Phoenix.

GE not only announced the deal in the Arlington Valley project, it also took the opportunity to tout its investments in solar over the past year. It called 2011 a record year and said it put up $1.4 billion in 48 – or 1 gigawatt’s worth – of solar power projects worldwide, including those in Canada, Australia, Portugal, Spain and Italy.

Solar power plant investments have taken off in the United States over the past three years as developers successfully secured permits and the federal and state governments provided policy and financial support to meet their clean energy and job creation goals.

GE is part of a growing club of investors who are taking a stake in large solar power plants. Newcomers include MidAmerican Energy, which announced last December its plan to buy a 550-megawatt project being built by First Solar in California. MidAmerican, controlled by Warren Buffett’s Berkshire Hathaway, also bought a 49 percent stake in the 290-megawatt Agua Caliente project in Arizona from NRG Energy last month. Agua Caliente also is being built by First Solar.

Another relative newcomer, Exelon, increased its appetite for solar by buying a 230-MW solar farm that is under construction in California from First Solar. Exelon previously owned a 10-MW solar project in Chicago that was completed in 2010. Private equity firm KKR made its first solar investment late last year alongside Google in an 88-MW project in California to sell power to the Sacramento Municipal Utility District.

The flurry of investment deals could have something to do with the demise of a federal grant program at the end of 2011. The program covered 30 percent of a project’s cost, and a project could qualify for the grant if it started construction or met some procurement requirements by the end of 2011. The Arlington Valley project, for example, will qualify for the grant. 

It will be interesting to see if project financing will become harder to come by and whether the job creation pace will slow down noticeably as a result of the grant program’s demise. Solar energy trade groups certainly have made that argument and are still working on getting Congress to renew the program. There is another federal incentive, a 30 percent investment tax credit, that will last through 2016 and could still entice investors to put money in solar. The tax credit is available to investors who take an equity stake in a project. 

While we wait to see if equity investments in solar will go up or down, we are likely to see debt financing flourish. That was the takeaway from the presentation by Mike Eckhart, a managing director at Citigroup, during Photon’s conference in San Francisco earlier this month

“PV’s economics is tied to the interest rates,” Eckhart said. “We are at a golden age where the interest rates are zero, so we have two to four years of runway to get this market to take off.”