SMUD will use the money to design, build, and test a concentrating solar power project. It works differently than solar photovoltaics.
The technology uses mirrors to concentrate sunlight and focus it on water to produce steam.
The steam will be fed into turbines at the natural gas-fired Cosumnes Power Plant to produce electricity.
Elaine Sison-Lebrilla with SMUD says the system must be feasible and economical.
"If it proves to be both then it's a good thing and we would move forward," says Elaine Sison-Lebrilla. "But its very critical that we know it's feasible both technically and economically for our power plant."
The concentrating solar power project would generate an additional 10 megawatts of electricity to help during peak demand.
It would also include energy storage technology to improve performance. It would take four years to complete.