Chicago-based Lincoln Renewable Energy said yesterday that it will build and own the 10-megawatt Oak Solar power plant, the largest non-utility-owned photovoltaic power plant in the Eastern U.S. The company made the announcement after securing a $41 million power-sales and project-finance deal with Macquarie Energy LLC.

The project, which will be completed and operational by the end of 2011, will provide enough energy to power more than 2,000 homes and offset 16,000 tons of carbon dioxide on an annual basis, said Lincoln Vice President of Finance Sanjeev Menon.

The New Jersey project is being constructed by The Ryan Company, a subsidiary of Quanta Services Inc., and will use Yingli Solar (NYSE: YGE) modules, according to Menon.

While New Jersey offers strong incentives for solar developers, it’s also a difficult place for third-party power producer to gain project financing, according to Menon.

“New Jersey is an SREC [i.e., solar renewable energy credit] driven market. The incentives are large, but at the same time, the transactions are not easy to finance because of demand and supply issues,” he said.

Larger plants are being built in New Jersey, like the 20 megawatt Panda project, being developed by Panda Power Funds and Consolidated Edison Inc., with Con Edison as a part owner and purchaser of the electricity produced. Con Edison will use the SRECs to meet New Jersey’s SREC requirements.

A plant like Oak Solar has to go through two separate processes.

It has to bid out its SRECs and the power produced, but one takes place on an annual basis while the other occurs less regularly. The disconnect makes it harder to attract financing. This may be dealt with when the state issues its energy master plan later this year, Menon said.

But, for this project, Lincoln signed a long-term power-purchase agreement with Macquarie Energy. Menon was not able to say how long, just that it was shorter than the 15 and 20 year power-purchase agreements signed in other states.

Lincoln is developing wind and solar projects across the country, Menon said.

“Our minimum project size is 10 megawatts. At the end of the day, we are a solar and wind developer,” Menon said. The company develops sites and owns the projects, then sells the electricity produces through agreements with local utilities.

Image courtesy of Public Service Enterprise Group Inc.