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Or, do I have to install an isolated 1/0 in both conduits. If I did this I would have (4) #300MCM and (2) 1/0 in each conduit. This would seem like overkill for two 20A 120V circuits.

It might indeed seem like overkill, and I might ask again if that's what they are reaaly needing, just to make sure. But if it is, then install the wires. You'll also need insulated isolated ground busses (so identified) for any panels the IG goes thru as well.

I'd make both parallel feeders look exactly alike, and of course of equal lengths.

Radar

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