Along a dusty two-lane highway in California’s Mojave Desert, 550,000 mirrors point skyward to make steam for electricity. Google Inc., Chevron Corp. and Goldman Sachs Group Inc. are betting this energy will become cheaper than coal.

The 1,000-acre plant uses concentrated sunlight to generate power for as many as 112,500 homes in Southern California. Rising natural gas prices and emissions limits may make solar thermal the fastest-growing energy source in the next decade, say backers including Vinod Khosla, the founder of computer maker Sun Microsystems Inc. Costs for the technology will fall below coal as soon as 2020, the U.S. government estimates.
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“Solar thermal can provide a substantial amount of our power, more than 50 percent,” says Khosla
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Nine solar thermal plants built in the California desert from 1985 to 1991 still operate, with Juno Beach, Florida-based FPL Group Inc. running seven. They have combined capacity of 354 megawatts, enough to power 230,000 Southern California homes. Development slowed when Congress eliminated tax credits for alternative energy in the early 1990s. Laws put in place in 2005 give solar investors a 30 percent tax credit.