Economies of scale suggest that small scale plants wont be economically viable but the Labour/Greens policy doesn't rely on that. For example, The Greens could support a large scale solar array on the decommissioned Tiwai site and it would be financially viable on the basis Greens provide it with a guaranteed return of 8% - the fact that the price of that power is uneconomic would be irrelevant. Now obviously (I hope) the Greens wouldn't do that but the point is their model does not require something to be economically viable as NZPower could make it financially viable if it chooses to.
On this basis, small scale plants that the big four think of as too small to worry about may be investigated by a regional lines company (ie. a landfill gas to power generator)