FERC last week broke with precedent in a decision that will hamstring the ability of renewables-plus-storage developers to optimize the output of their projects while still qualifying for treatment under the Public Utility Regulatory Policies Act.

The commission’s lone Democrat, Richard Glick, sharply dissented from the Sept. 1 ruling, which found that the 210-MW Broadview Solar hybrid project in Yellowstone County, Mont., cannot be certified as a PURPA qualifying facility because it exceeds the 80-MW cap on power production capability specified in the 1978 law. The commission found the project exceeded the cap despite the 80-MW limitation on its interconnection with the NorthWestern Energy transmission system (QF17-454).

Montana has been an especially contentious front for PURPA disputes in the West, where utilities contend the law requires them to integrate large volumes of QF renewable resources at contracted rates far above market rates. Montana’s Supreme Court last month ruled that the state’s Public Service Commission had “arbitrarily and unlawfully” reduced solar generators’ payments and contract lengths under PURPA. (See Montana Supreme Court Rebuffs PSC on PURPA.)

Broadview, a subsidiary of Broad Reach Power, stepped into the PURPA fray last year when it revised its QF application to reflect a gross capacity of 160 MW (up from 104.25 MW in the original 2016 application) and include 50 MW of energy storage, while maintaining a net capacity of 80 MW.

FERC noted the company explained that while its planned solar array “is sized greater than 80 MW to increase the facility’s capacity factor, the aggregate capacity of the solar array and battery storage system cannot exceed 80 MW net capacity due to” limitations on the project’s DC-to-AC inverters. Broadview said the increased power is not in a form to be transmitted to the grid without additional inverters.

The company contended that FERC’s finding in 1981’s Occidental Geothermal, Inc. that “a facility’s power production capacity is not necessarily determined by the nominal rating of even a key component of the facility” backs up its claim that the solar facility falls within the 80-MW limit.

Broadview also pointed to FERC’s determination in Malacha Power Project, Inc., a 1987 ruling that said that “the electric power production capacity of the facility is the capacity that the electric power production equipment delivers to the point of interconnection with the purchasing utility’s transmission system.”

NorthWestern contested Broadview’s application, arguing that facility is not a single QF, putting it outside PURPA’s 80-MW capacity limit. It said the solar array and battery storage system are two distinct power production facilities at the same site because the 160-MW solar array exceeds the 80-MW net capacity limit and the battery qualifies separately as a small power QF.

The utility questioned Broadview’s interpretation of Occidental, contending that a facility’s individual components represent the most relevant calculation of its net capacity and that Occidental had actually determined that a facility could qualify as a QF only if it has the potential to produce more than 80 MW for limited periods because of circumstances outside the facility’s control.

The Edison Electric Institute argued that FERC should not allow generation operators to “artificially limit” the output from their facilities at a single location to stay within the 80-MW limit.

“With the growth of new technologies, such as batteries, and the increased sophistication of resources, EEI asks the commission to reconsider whether it is still appropriate to measure QF power production capacity based on net capacity as established in Occidental, rather than the rated capacity test that EEI asserts was initially intended by Congress,” FERC noted.

Occidental Reversal

FERC’s decision aligned with the complaints made by NorthWestern and EEI. While the commission acknowledged that its 40-year-old Occidental decision specified that a facility’s “send out” capability — and not the size of the project’s individual components — was the determining factor for PURPA eligibility, it now finds “there is a significant difference between (i) design capabilities that may incidentally or occasionally cross PURPA’s 80-MW threshold due to certain components or variances, such as fuel or ambient temperature, and (ii) a facility purposefully designed with a 160-MW solar array.”

“Broadview’s proposal represents a significant departure from any project that the commission has previously considered under a QF application,” FERC wrote. “That such a project arguably could satisfy the ‘send out’ analysis the commission applied in Occidental compels us to reconsider whether it is a facility’s ‘send out’ that is determinative of whether the facility complies with the 80-MW threshold established in PURPA.”

Based on that reconsideration, the commission determined that the Occidental finding that the maximum net output of the facility (or send-out) represents the facility’s power production capacity is inconsistent with the 80-MW power production capacity limit specified by PURPA and regulations.

“Re-examining Occidental and the potential such an analysis creates for the approval of projects that do not comply with the plain language of PURPA, we conclude that we have improperly focused on ‘output’ and ‘send out,’ instead of on ‘power production capacity,’ which is the standard established both in the statute and our regulations,” the commission wrote.

‘Preferred Outcome’

In his dissent, Commissioner Glick said that any “fair reading” of the PURPA statute and commission precedent would put Broadview’s power production capacity at 80 MW and make it eligible for QF status.

“The commission’s contrary determination will make QF status turn on the capacity of any one component of the facility, rather than the actual power production capacity of the facility itself. That conclusion finds no support in the statute, our precedent or common sense,” Glick wrote.

Glick agreed with Broadview that increasing the project’s power production capacity worked to improve its capacity factor, “meaning that the facility will, all else equal, generate a higher fraction of its total 80-MW capacity than it would with a smaller array … a result I would have thought the commission would be eager to encourage.”

He further called out the commission for a “break from precedent” that reaches “its preferred outcome.”

“On a broader level, I cannot help but express my concern that so casually upending settled precedent creates unnecessary uncertainty, making it hard for developers to know which precedents they can count on and which they cannot,” he said.