On December 17, 2020, FERC issued a final rule permitting Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment to be certified as cogeneration qualifying facilities (“QFs”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”).  The Final Rule follows FERC’s October 15, 2020 Notice of Proposed Rulemaking (“NOPR”) (see October 21, 2020 edition of the WER), and addresses the comments received in response to the NOPR.  While the NOPR would have limited the type of eligible fuel cells to only solid oxide fuel cells, the Final Rule modified the definition of “useful thermal energy” in section 292.202(h) of FERC’s regulations to include all fuel cells that use waste heat in an integrated fuel reforming process.

FERC’s PURPA regulations define a topping-cycle cogeneration facility as a cogeneration facility where the energy input is first used to produce useful power output and a portion of the rejected heat from the power production process is used to provide “useful thermal energy.”  Prior to this rulemaking, “useful thermal energy” was defined as thermal energy that is: (1) made available to an industrial or commercial process; (2) used in a heating application; or (3) used in a space cooling application.  In the NOPR, FERC recognized that there have been recent technological advances in fuel cells that were neither known nor anticipated when FERC adopted its original definition of “useful thermal energy” in 1980.  The Final Rule affirms FERC’s proposal in the NOPR to amend the definition of “useful thermal energy” to include the production of heat/steam by a fuel cell system with an integrated hydrocarbon reformation process for production of fuel for electricity generation. As a result, under the Final Rule, such fuel cell systems can qualify as cogeneration QFs under PURPA.

Pointing to FuelCell Energy’s comments submitted in response to the NOPR, FERC agreed that the NOPR endorsed a specific technology, solid oxide fuel cells, instead of establishing standards that would apply to all similar fuel cells.  In order to shift the focus from a specific fuel technology to, more generally, the integrated use of waste heat for reforming hydrocarbons to produce hydrogen to fuel a fuel cell, FERC modified the proposed definition in the NOPR to state that useful thermal energy output includes “the thermal energy that is used by a fuel cell system with an integrated steam hydrocarbon reformation process for production of . . . fuel for electricity generation.”

FERC concluded by affirming that fuel cell systems subject to the Final Rule must meet additional requirements imposed by PURPA section 210, specifically that: the “thermal energy output . . . is used in a productive and beneficial manner”; and “[t]he electrical, thermal, chemical and mechanical output of the cogeneration facility is used fundamentally for industrial, commercial, residential or institutional purposes and is not intended fundamentally for sale to an electric utility.”

The Final Rule goes into effect 60 days after publication in the Federal Register.

Click here to read the final rule.