First Solar said it plans to build the world’s largest solar plant in China, the first major project by a US company in the country.

Under a memorandum of understanding with the Chinese government, First Solar will build a 2GW power plant – enough to power about 3 million Chinese households – at Ordos City, Inner Mongolia.

The company said it may also build a new manufacturing plant in China.

The announcement comes as the solar industry struggles to emerge from a year-long slump that saw financing for new projects dry up and reduced subsidies in Spain create a glut of unsold cells and panels, according to Reuters.

First Solar will begin constructing a 30MW demonstration project in June 2010 in Ordos. The second and third phases will require 100MW and 870MW projects that will be completed in 2014. A final 1,000MW installation will be finished in 2019.

The project is part of China’s programme to generate 10% of its energy from renewable resources by 2010 and 15% by 2020 to help meet its growing energy needs.