updated 1/6/2008 2:25:20 PM ET 2008-01-06T19:25:20

An aerospace manufacturer is developing a way to use molten salt to store solar energy that could produce enough electricity to power 250,000 to 500,000 homes a year.

Hamilton Sundstrand, a subsidiary of United Technologies Corp., announced last week that it is working with a California venture capital firm on the project.

The partnership between Hamilton Sundstrand, which makes power systems for the Space Station and Boeing's Dreamliner aircraft, and US Renewables Group in Santa Monica, Calif., would use molten salt to store the sun's heat, which will then be converted to electrical power that could be added to utilities' grids at times of peak demand.

Utility customers are often called on to turn down air conditioners and refrain from using appliances during long heat waves that put pressure on utilities to supply electricity without interruption.

Hamilton Sundstrand and US Renewables Group, which will handle financing and project management, say the plan's use of molten salt overcomes the problem of storing solar power collected on sunny days, but is needed at night or during cloudy days.

Molten salt, a mixture of sodium and potassium nitrate, circulates through a central receiver, is heated by sunlight to more than 1,000 degrees, stored in a tank and dispatched into a steam generator. The steam drives a turbine that generates electricity. The cooled salt re-circulates and the process begins again.

The salt loses only 1 percent of its heat per day, which is far better than water and other materials, said Dan Coulom, a spokesman for Hamilton Sundstrand.

Rocketdyne, purchased by United Technologies in 2005, developed the molten salt storage system technology. The Hamilton Sundstrand Rocketdyne segment, which makes liquid metal and molten salt heat transfer systems, is the prime contractor for the International Space Station electric power system.

The project, which is expected to begin generating electricity in three or four years, would produce up to 500 megawatts of peak power a year. That's enough to supply electricity to about 250,000 to 500,000 homes, depending on time of day, according to the U.S. Department of Energy.

Revenue of $1 billion is expected over 10 to 15 years, Coulom said. The cost of the project is still being negotiated, he said.

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