Recently, the focus of many renewable energy developers in the United States has been on large scale projects over 200 MW. As I discussed in a previous post, the large projects have economic advantages like spreading out fixed costs and less team effort to generate the same profit margins. Small/Medium utility scale projects, meaning those between 20 and 200 MW, were more popular 5-10 years ago because they fit the size that most offtakers needed at the time. It has become easier to contract the large projects since then as renewable power costs have come down and the size and quantity of deals has gone up. The small/medium utility scale projects are still common in many regions of the US, but they account for a smaller percentage of the overall market than they did previously.
While the 200+ MW projects are still preferred by developers, many of the suitable sites across the US have already been taken. Either the land or the interconnection capacity isn’t available at the right locations to start new large scale projects today. If a developer is initiating a greenfield effort right now, they must consider the best use of capital and team effort. If you spend significant resources to find 1-2 large scale sites, you need to consider if you could have found 5-10 small/medium scale sites with the same resources. The pendulum shifts to the small/medium scale approach in regions where the large scale sites are most scarce.
Small/medium size projects can connect to lines between 69 KV and 161 KV that are less expensive to upgrade. Those lines are more plentiful, have fewer queue positions on each segment, and are often closer to load. This is especially true in areas that have not traditionally been targets of solar developers, such as flat land or high solar resource areas, but are instead in locations closer to load where new generation is more valuable.
In addition to having a larger selection of lines, changes in project economics and in construction techniques have opened up new parcels of land that were once bypassed by developers. For example, more land can hit a $50/MWh price then can hit a $30/MWh price. This is a similar calculation to the oil producing regions that are only viable when a certain barrel price is exceeded. Construction teams are more comfortable working on sloped land than they were before and products made by racking companies allow for more slope. This means that a developer can take a fresh look at land that was once judged to not be suitable for projects but is now with new buildability assumptions.
For a developer siting projects today, small/medium utility scale projects can be a great option if you can find locations with low interconnection upgrades. Those projects can still achieve similar economics to larger ones once transmission and proximity to load are considered.
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