In a split decision, the Federal Energy Regulatory Commission March 18 reversed an earlier order that denied a proposed hybrid facility located in Yellowstone County, Montana, recertification as a small power production qualifying facility under the Public Utility Regulatory Policies Act of 1978.
Certification as a QF typically aids small renewable power project developers with securing financing as, under PURPA, the facility would have a guaranteed source of revenue because utilities must purchase power from QFs at avoided-cost rates, reflecting what the companies would have to pay to buy that same power from other generators or produce it themselves.
Over the objections of now-Chairman Richard Glick, FERC in September found that generating facilities such as solar-plus-storage resources could not meet the 80-MW statutory limit for power production capacity by relying on inverters as a limiting element on output. Further, the GOP majority reasoned that such an above-80 MW facility was inconsistent with the type of facility Congress intended to benefit from PURPA.
Broadview Solar, a subsidiary of Houston-based independent power producer Broad Reach Power whose application (QF17-454) for QF status was at the center of the order, argued in its rehearing request that FERC had "overturned settled precedent" dating back to the 1980s. It maintained that even though its proposed facility would be equipped with a 160-MW solar array and 50-MW battery, inverters would limit its maximum output to PURPA's 80-MW statutory threshold at the point of interconnection with NorthWestern-owned transmission lines.
Backed by Commissioners Neil Chatterjee, who was serving as chairman at the time, James Danly and Bernard McNamee, who left the commission days later, the order effectively threw out FERC's longstanding "send-out" analysis, which determined a facility's power production capacity based on the electricity that it could actually deliver to the interconnecting electric utility.
'Course correction'
On March 18, Chatterjee joined with the commission's Democrats to push through what he called a "well-supported course correction."
Congress in 1978 could not have foreseen that it would have been possible or economic to build a combined solar and battery storage facility that never injects more than 80 MW onto the grid, Chatterjee said during the commission's monthly open meeting.
"Although it's easy to focus on the fact that the solar array on its own would exceed the statute's 80-MW limit, that's not what this project is. It's not simply a solar array that instantaneously injects every megawatt it produces, and to treat it as such is an error," he said regarding his change in thinking. "Today's order appropriately accounts for the configuration of this hybrid facility and creates a path forward for other projects that may be similarly configured."
A study last year by Lawrence Berkeley National Laboratory researchers and the Electric Power Research Institute found about 4.6 GW of hybrid resource capacity was already online. Another 14.7 GW of hybrid resources were in the immediate-development pipeline, and 69 GW of proposed hybrid resources were in select interconnection queues, the study found.
Glick said during the meeting that granting rehearing and finding that Broadview's project does qualify as a small producer under PURPA was "applying simple common sense."
"It is not fathomable to conclude that Congress would be more concerned about the electricity a project could theoretically generate on its own but not deliver to any customer," he said. "Instead, since the statute is all about the sale of a project's output, the appropriate way to look at a facility is to assess how much can actually be sold to the purchasing utility."
Threatened uncertainty
Commissioner Allison Clements agreed. She contended that the previous order, issued before she joined the commission in December, "established a difficult-to-administer test that threatened to create uncertainty for future qualifying facilities or potential qualifying facilities."
"Because PURPA refers to the capacity of a facility and not the capacity of its generation subcomponents alone, capacity is best understood as the output of the facility, not power created but transmitted internally to its various constituent parts," she said. "Consistent with past precedent, it is reasonable to measure that output at the point of interconnection to the grid."
Dany and Commissioner Mark Christie, who joined the agency in January, issued separate statements dissenting to the order. The text of the order and those dissents were not immediately available on FERC's website.
