Dive Brief:

• Federal regulators on Thursday reversed a September decision to upend 40 years of legal precedent and deny a solar-plus-storage facility from receiving payments under the Public Utility Regulatory Policies Act (PURPA). 

• The Federal Energy Regulatory Commission, including Commissioner Neil Chatterjee, who was chair when the original order passed, voted to allow qualifying facility (QF) status under PURPA to the Broadview Solar facility in Montana. In the September order, FERC had ruled that because the facility had a gross capacity of 160 MW, it could not qualify for PURPA payments, despite long-standing precedent that facilities with a net capacity of 80 MW, a standard this project met, should qualify.

• The Solar Energy Industries Association had requested a rehearing on the rule, which FERC granted during its open meeting, and effectively reversed its original decision.

Dive Insight:

Utilities and solar developers have long griped over technicalities with PURPA — power companies are reluctant to pay fees to small power providers, in some cases accusing them of rigging the system through aggregation or other means. Solar developers, meanwhile, often feel utilities don't pay them the fair price required by the 1978 federal rule, and argue that such companies are only interested in maintaining market dominance.

The September ruling sided with utilities on a question that will only become more relevant: As solar technology advances, and panels become more efficient, is a facility cheating the system if its gross capacity exceeds 80 MW, but the amount it can supply to the grid at any given time does not? In a 1981 case, FERC had ruled a facility's eligibility under PURPA should be based on net capacity, but Edison Electric Institute, the trade group of investor-owned utilities, had argued that evolving technologies no longer match Congress' vision for what should constitute a QF, and therefore the net capacity assumption should no longer be the standard.

But Chatterjee, in a reversal of the vote he had cast in September, argued that because the facility never provides more than 80 MW to the grid at any one time, it was an "error" to deny it status as a QF before.

"It's not simply a solar array that instantaneously injects every megawatt it produces," he said during the meeting, "And to treat it as such is an error. 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."

Commissioner Allison Clements also weighed in on the ruling in her comments, noting it was the first time she's been able to do so as commissioner.

"PURPA exists to encourage the construction of small renewable energy and cogeneration facilities, and to create competitive pressure for monopoly utilities, to the benefit of customers," she said. "To further these policy goals, it is important that our policy clearly defines what facilities are eligible for compensation under PURPA." She added the previous order "unsettled decades of precedent and established difficult-to-administer tests that threaten to create uncertainty for future qualifying facilities or potential qualifying facilities."

SEIA commended the order, which favored arguments they raised in their request for rehearing. "This is good news for solar + storage facilities across the United States and will ultimately make sure that independent power producers are fairly evaluated when it comes to calculating their capacity and the value they bring to the grid," said Gizelle Wray, director of regulatory affairs for the group, in an emailed statement. "We are grateful to the Commission for reinstating this policy."

Commissioners James Danly and Mark Christie dissented on the order, which passed 3-2.