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.