Thought Leadership

FERC Open Meeting Orders Address Interconnection Issues for Solar Generation

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In orders issued at its March 18 open meeting, the Federal Energy Regulatory Commission addressed several matters with significant implications for renewable resources, particularly solar generation.

In Hollow Road Solar LLC, the Commission determined that local property tax relief granted to a qualifying small power production facility (“QF”) under Virginia’s Pollution Control Statute did not constitute a “State Subsidy” under PJM Interconnection, L.L.C.’s Minimum Offer Price Rule (“MOPR”).

Under the MOPR, a resource that is eligible to receive a State Subsidy must offer into the PJM wholesale capacity market at an administratively determined price, subject to certain narrow exemptions.  For new resources that have not yet cleared the capacity market, this price is the default Net CONE for the resource type (e.g., wind, solar).

In developing the MOPR, PJM generally defined State Subsidy to encompass any financial benefit inuring from a state mandated or sponsored process connected to the procurement of capacity and energy or the development and operation of capacity resources, or that could have the effect of allowing a resource to clear in the PJM Capacity Auction.  Importantly, FERC exempted general industrial development and local siting statutes from the definition of State Subsidy as these statutes are generally applicable and not directly tied to participation in the wholesale power markets.

Hollow Road Solar, a 20 MW solar facility under development in Virginia, asserted that the Virginia Pollution Control Statute should be excluded from the definition of a State Subsidy because it is a statute of general applicability, offering tax relief broadly to certified pollution control equipment facilities, without any tie or connection to participation in the PJM capacity or wholesale energy markets.

The Commission, over the opposition of PJM and its Market Monitor, accepted Hollow Road Solar’s petition and determined that the Virginia Pollution Control Statute is not “nearly directed at or tethered to wholesale market participation” such as to render it a State Subsidy under the MOPR.

Commenting on the order, Commissioner Chatterjee – a strong advocate of PJM’s expanded MOPR – noted that Hollow Road Solar’s petition provide the Commission an opportunity to apply PJM’s MOPR rules “in a manner that’s both consistent with our prior findings and reflective of plain old common sense.”

Separately, in Broadview Solar, LLC, the Commission reinstated its long-standing use of “send-out” analysis to determine a facility’s power production capacity for purposes of certifying as a QF.

In a September 2020 order, the Commission denied Broadview Solar’s QF application, finding that the facility exceeded the maximum capacity threshold for a small power QF (80 MW).

The Broadview Solar facility consists of a 160 MW (DC) solar generating facility and a 50 MW battery storage facility, the maximum output of the facility is limited to 80 MWs (AC) by the project’s invertors.

In a September 2020 Order, the Commission denied Broadview Solar’s QF certification finding that the facility’s power production capability exceeded the maximum threshold for small power QFs even though the maximum amount of power it could “send out” at any point in time was limited to 80 MW by the facility’s invertors. 

On rehearing, the Commission reversed course, affirming the validity of the “send-out” analysis it had applied previously and determining that Broadview Solar met the requirements of a QF thereunder. 

Touting the decision, Chairman Richard Glick commented that the Broadview Solar order “restores a common sense understanding that QF status should turn on the power production capacity of a facility as a whole, not the capacity of any individual component.”

These orders demonstrate that the Chairman Glick-led FERC will actively look to change the course set for renewables when presented with the opportunity.

 

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