7/8/2024 Update: The U.S. Supreme Court has vacated the D.C. Circuit’s order, discussed below.  The D.C. Circuit applied Chevron deference in affirming FERC’s decision in the proceeding below.  As a result, the U.S. Supreme Court has vacated and remanded back to the D.C. Circuit to reconsider the case in light of Chevron being overturned.

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Yesterday, February 14, 2023, the D.C. Circuit issued an order affirming FERC’s order in Broadview Solar, LLC, 174 FERC 61,199 (2021) and its “send-out” approach to determining the net power production capacity of a Qualifying Facility (“QF”).  As a brief recap of the history of Broadview, Broadview filed an application for QF certification of a 160 MW solar and 50 MW battery storage system in September 2019.  The facility’s inverters limited its instantaneous export capability to 80 MW.  In a September 2020 order, the Commission denied the application, concluding that Broadview’s 160 MW of solar nameplate capacity exceed the 80 MW limit for QF status, reversing decades of prior precedent that relied upon a facility’s “send-out” capacity to determine its power production capacity.  Then, in March 2021 and under the leadership of a new Chairman, the Commission reversed course and determined that while the statute was ambiguous as to the proper measure of a facility’s “power production capacity,” the “send-out” approach was the best interpretation because it considered all of the facility’s component parts working together. Therefore, Broadview did meet the requirements to be a QF after all, because its inverters capped its instantaneous send-out capacity to 80 MW.  The Commission reaffirmed that order in June 2021, rejecting arguments that the battery and solar facilities should be considered separately.  The Commission’s orders were appealed to the D.C. Circuit.

In its order yesterday, the D.C. Circuit agreed with the Commission that the statute was ambiguous and determined that the Commission’s interpretation was reasonable.  The D.C. Circuit specifically noted that the inverters are an integral component in producing power, that the only grid-usable power is AC power, that the mandatory purchase obligation under PURPA only applies to grid-usable, or AC power, and that the Commission’s focus on net output was consistent with the statutory purpose of encouraging the development of renewable resources. The D.C. Circuit explained that the use of the battery to release power at optimal times was a feature allowing the facility to more-consistently produce and send out the maximum amount of renewable energy permitted under the statute. 

In response to arguments raised by the appellants regarding Broadview’s inconsistent reporting in Form 556, the D.C. Circuit noted that it was reasonable for the Commission to treat Form 556 as a tool meant to aid the Commission in determining a project’s eligibility for QF status and not itself “determinative” or “dispositive.”

In response to arguments that the Commission should have treated the facility and battery separately, the D.C. Circuit pointed to FERC’s requirement to consider the combined power production capacity of facilities at the same site and the fact that the DC power stored in a battery is not usable to the grid to affirm that FERC was reasonable in determining that the battery is not a separate “facility.”

Altogether, the D.C. Circuit’s order should provide renewable energy developers with more comfort and flexibility in designing QFs that are inverter-limited to 80 MW or less but include batteries or more than 80 MW of DC generating capacity.

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Photo of Jessica Bayles Jessica Bayles

Jessica Bayles is a partner in Stoel Rives’ Energy Development group, where she focuses her practice on energy regulatory support for renewable project development and transactions, compliance counseling, and regulatory controversies. Jessica counsels renewable energy developers and asset managers on compliance with the…

Jessica Bayles is a partner in Stoel Rives’ Energy Development group, where she focuses her practice on energy regulatory support for renewable project development and transactions, compliance counseling, and regulatory controversies. Jessica counsels renewable energy developers and asset managers on compliance with the requirements of the Federal Energy Regulatory Commission (FERC). She has significant experience in complex litigation and settlement proceedings before FERC. She also advises large electric customers in state public utility commission proceedings.

Click here for Jessica Bayles’ full bio.

Photo of Jason Johns Jason Johns

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations…

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations at the ISO/RTO level, where he represents independent power developers and utilities. His experience includes negotiating major facility contracts, such as interconnection, transmission, and power purchase agreements; prosecuting disputes at FERC; and counseling and defending clients on issues related to regulatory compliance.

Jason also works closely with large commercial and industrial users of electricity and gas, such as aerospace companies, pulp and paper mills, steel mills, and tech company data centers. In that role, Jason helps clients negotiate power and gas supply contracts, interstate pipeline capacity asset management agreements, and pipeline bypass agreements. Jason has also assisted these clients with demand management agreements, the installation of on-site resources (such as battery storage, fuel cells, and solar PV), and with retail and wholesale power purchase agreements for renewable energy and other resources. Jason also serves as a board member of The Climate Trust, a national leader in carbon offset projects and innovative climate change solutions.

Jason and his wife are parents to two growing boys, and they live just outside of Portland, Oregon.

Click here for Jason John’s full bio.