While solar investments are one of the hottest areas for the discerning renewable energy investor, sprawling extra-large solar farms are not always the most popular investment of choice. This is borne out by Germany-based clean-energy fund Hep Kapitalverwaltung AG. The fund, having agreed to invest $50 to $80 million annually in a partnership to develop small solar projects in the U.S. with North Carolina partner ReNew Petra are looking to reduce risk while making smart bets.

Germany’s Hep has plenty of development experience the firm has developed about 400 megawatts of solar in Germany, the U.K. and Japan and ReNew Petra has been involved in 200 megawatts of energy projects. The question is less about the experience in developing larger projects but more around diversification and risk. As Alexander Zhou, head of Mergers and Acquisitions said “If we have to choose between investing in two 100-megawatt utility scale projects in Texas versus a diversified portfolio of small solar across the U.S., we’d prefer the portfolio.”

Other players like Innovative Solar Systems (ISS) specialize in larger solar farms in the range of $100MM - $25B with the promise of returns between 10% - 500%. Others specializing in larger scale deployments include First Solar. The company has successfully developed five of the largest projects in the U.S. totaling more than 1900 MW of solar energy. So while it remains to be seen if investing in a higher volume of smaller scale projects vs. a handful of megadeals is a better strategy, utilities will continue to benefit from more investment. America’s utilities are seeking solar as a natural gas and coal replacement for electricity, different players of different sizes will help create the right mix of utility scale generation for the future.