The project will be constructed at Fauquier County near Remington generating station, on a piece of land owned by Dominion Virginia Power.
The project, which will have the capacity to power 5,000 homes, is expected to start operations in late 2017.
Virginia Governor Terry McAuliffe said: "This agreement is a tremendous step forward in our ongoing effort to make Virginia a leader in the renewable energy economy."
"This partnership will help lower carbon emissions in Virginia and diversify our energy portfolio, while growing the solar and data center industries in Virginia."
Dominion is planning to have 400MW of solar power installed capacity in the state of Virginia by 2020.
Dominion Resources chairman, president and CEO Thomas F. Farrell II said: "This forward-looking partnership will assist us in our continued commitment to increase the renewable energy available to serve our customers in Virginia."
The partnership is part of Microsoft’s own initiative to go green. The company had previously agreed to buy 175MW of wind energy in Illinois to power its Chicago data center and in Texas to purchase 110MW of wind energy to power its San Antonio data center.
Microsoft chief environmental strategist Rob Bernard said: "By investing in these projects and partnering with states and utilities, Microsoft can provide long-term certainty needed to expand the amount of renewable energy available on the grid."
