The Los Angeles Department of Water and Power (LADWP) FiT scheme is set to generate 150MW of energy through rooftop panels.
The first demonstration wave of 10MW of projects will be followed by five tranches of 20MW every six months, which will be bought at a fixed price. The scheme also includes a 50MW installation on land in the nearby Mojave Desert.
LA mayor Antonio Villaraigosa said: "The FiT programme takes advantage of LA's abundant sunshine to spur new private sector investment that will create jobs and decrease our city's reliance on dirty fossil fuels."
Until now, most solar projects in the city have been built through the net-metered Solar Incentive Program (SIP), where customers receive rebates from LADWP for installing solar panels.
LADWP general manager Ronald O. Nichols said the FiT programme was an important step forward in transforming the city's power supply and meeting the state-mandated renewable energy level of 33% by 2020.
He said that the scheme would eventually reduce 147 metric tons of CO2 emissions, equivalent to removing 28,300 cars off the road.
He also estimated that it would generate more than $500 million dollars in private investment and leverage $300 million in federal tax credits for LA businesses.
Brad Cox, senior managing director of property investor Trammell Crow Company, said: "We have the largest underutilised rooftop capacity in California, and more than 300 days of sunshine a year."
"This is a no-brainer: a cost-effective method for businesses to create economic opportunity while generating energy in the LA basin."
LADWP will begin accepting applications for the second 20MW allocation on Monday July 8.