That amount of electricity would be equivalent to about six new power stations.

The measure was approved on a 3-to-1 vote with one commissioner excusing himself because of a possible conflict of interest.

Michael Peevey, president of the commission, said the effort "is designed to create a sustainable solar industry" and to demonstrate California's leadership in moving to reduce dependence on fossil fuels to produce energy.

If the program is fully implemented, California would become the world's third-largest solar generator behind Japan and Germany. The state currently has about 100 megawatts of solar electricity.

The program will offer rebates for adding solar systems and is expected to give a big boost to manufacturers of solar power generating cells and panels.

An industry official said the commission's decision will give investors more certainty about the future of solar electricity.

"This is a phenomenal decision. The regulatory environment has been the number one uncertainty for the investment community. This long-term program provides the certainty we have been sorely lacking," said Howard Wenger, executive vice president of privately held PowerLight Corp., a Berkeley, California-based solar systems developer.

The money for the program will come from existing funds already earmarked for solar energy and gas and electric utility rates.

The average residential utility bill would go up by 65 cents a month, according to Environment California, a solar power supporter.

Solar spending could save California utility customers an estimated $9 billion from a reduced need to build new power plants and purchase electricity supplies during high demand days in the summer, according to a commission report.

Schwarzenegger pushed a solar energy bill in the state legislature last year, but it stalled amid policy disputes and amendments.