A fossil fuel company has started work on the Northern Territory’s largest solar farm.

Italian-owned Eni Australia – which normally works in oil and gas - says the $40 million, 70-hectare site near Katherine should be up and running later this year, with 100,000 solar panels churning out a 25-megawatt capacity.

Electricity will be supplied to the main grid between Katherine and Darwin under a power purchase agreement with retailer Jacana Energy.

The deal should boost NT renewable energy by up to 4 per cent.

Eni Australia managing director Ernie Delfos says the project has overcome some delays and is now on track.

“A lot of being able to put this project together relied on the permitting. It is the largest solar farm in the Territory,” he said.

“And it is the first to be 100 per cent dedicated just to the power grid. The solar power here is not being used for nearby infrastructure.

“So getting all those permits in place by the original owner was crucial, and being able to then do the modelling to make sure that the power could be supplied into that grid took a while.

“That's all been put in place, and when we took over the project the only hurdle was to execute the project, which we're doing now.”