Reed Smith Client Alerts

On March 19, 2021, the Federal Energy Regulatory Commission (FERC) issued an order holding that a proposed hybrid solar photovoltaic facility is a qualifying small power production facility (QF).1 Under the Public Utility Regulatory Policies Act of 1978 (PURPA), a small power QF’s “power production capacity” cannot exceed 80 MW. The solar facility at issue has a gross capacity of 160 MW, but due to the installation of inverters and the effect of losses, the maximum net capacity of the facility is 80 MW. FERC held that a facility’s “power production capacity” means the maximum output that can be produced by all of its constituent parts, which in this case is 80 MW. This holding will enhance the ability of generation facilities to meet the definition of QF.

Authors: Colette D. Honorable Debra Ann Palmer Keturah A. Brown

Broadview Solar, LLC (Broadview) made various filings with FERC seeking a determination that its facility met the qualifications for a small power production QF because, due to all elements of its solar facility including the inverters, its output would not exceed 80 MW. On September 1, 2020, FERC issued an order denying QF status to Broadview, finding that a facility’s “power production capacity” is determined by its “maximum net output.”2 In Broadview’s case, FERC initially concluded that the maximum net output was 160 MW, even though the facility’s inverters precluded an output exceeding 80 MW (after consideration of losses).

Broadview sought a rehearing of the September 1 order. In its March 19 order, FERC set aside its September 1 order, noting PURPA does not define “power production capacity” or explain how FERC is to determine the power production capacity of a particular facility. Thus, PURPA does not directly address the question of “how to measure the power production capacity of a facility whose generating subcomponents (e.g., solar panels) have a nameplate capacity of greater than 80 MW, but which is physically incapable of producing more than 80 MW for sale to the interconnected electric utility at any one point in time.”3 FERC wrote that in the past it had looked to the maximum amount of power the facility could produce for sale to the interconnecting utility, and therefore, its September 1 order was an anomaly.

The March 19 order notes that, in enacting PURPA, Congress intended to encourage the development of QFs. In early orders under PURPA, FERC recognized that while the ratings of a facility’s generating equipment may exceed 80 MW, its power production capacity is “the maximum net output of the facility which can be safely and reliably achieved under the most favorable operating conditions likely to occur over a period of several years...”4 The March 19 order also points to an earlier rulemaking that “further underscored [FERC’s] view that a qualifying facility includes all components necessary to produce electric energy in a form useful to an interconnected entity...”5