SAN JUAN, Puerto Rico (AP) — Gov. Luis Fortuno announced Thursday that the Caribbean's largest solar energy project will be built in Puerto Rico, an island heavily dependent on petroleum where power costs twice what it does on the U.S. mainland.

The $98 million project financed by private investors will be built in the southern coastal town of Guayama by AES Solar, a company based in Arlington, Virginia.

Some 100,000 solar panels are expected to provide enough energy to 6,500 homes by mid-2012, with consumers seeing an estimated 40 percent drop in their power bills, authorities said.

"This is a permanent savings in people's pockets," Fortuno said. "We have to stop depending on petroleum."

The project is one of seven that the government recently approved to help lower energy costs on an island that relies on petroleum to generate 70 percent of its power. It is also expected to create 200 temporary jobs.

Puerto Rico has pledged to buy 100 percent of the energy produced by the solar panels for 20 years, but private companies also can buy power if they are interested, Fortuno said.

It is the second largest project to be built by AES Solar and the first that the company builds in the U.S., said CEO Robert Hemphill. Each panel is expected to produce 20 megawatts of power.

The announcement comes at a time of customer outrage at power bills and growing dissatisfaction with the island's state-owned power company, with dozens of protesters demanding to meet with officials outside the company's headquarters on Thursday.

The majority were protesting government plans to build a 92-mile (148-kilometer) natural-gas pipeline that would bisect the island, a $450 million project that Fortuno says will lead to $1 billion a year in savings.

Fortuno said he would push ahead with that plan and with the solar panel project despite critics including farmers who say their crops are being razed to make room for renewable-energy projects.

"Either we want cheaper power, or we don't," Fortuno said.

He also acknowledged that the Electric Energy Authority is struggling with its own internal turmoil.

The company's longtime director resigned in late September following sharp criticism that he was overpaid and received bonuses even as the company struggled to restore power after the passage of several tropical storms.

A new director that was appointed last week was fired on Monday following allegations that he was stealing power by altering the electricity meter at one of his residences, which he denied.

Fortuno said Thursday that the island's Department of Justice is investigating the power company following other allegations of corruption, adding that officials will be held accountable regardless of their position.