FERC Proposes PURPA Amendments to Permit Solid Oxide Fuel Cell Systems to Qualify as Cogenerators

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On October 15, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to revise its regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”) to permit Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment to be certified as cogeneration qualifying facilities (“QFs”). FERC proposed the changes in response to what it termed the “technical evolution of cogeneration,” and in response to Bloom Energy Corporation’s (“Bloom Energy”) petitioning FERC for such revisions.

Cogeneration facilities produce electric energy as well as steam (or other forms of energy like heat) which can be used for industrial, commercial, heating, or cooling purposes. Cogenerators that certify as QFs under PURPA enjoy certain exemptions from regulation under the Federal Power Act; PURPA also requires utilities to purchase QF power at avoided cost rates. In order to account for future technological advancements, when Congress passed PURPA it directed FERC to “from time to time . . . revise[] such rules as it determines necessary to encourage cogeneration.”

The NOPR explains that in the last decade, Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment have become a viable option for efficient electric energy cogeneration furthering PURPA’s “goal of encouraging the innovation and development of cogeneration facilities.” As a result, FERC found that this development offered a sufficient basis for issuing a NOPR to revise PURPA’s regulations, which were promulgated in 1980.

FERC specifically proposes to add a new paragraph (4) to § 292.202(h) of its PURPA regulations, amending the definition of “[u]seful thermal energy output” of a topping cycle cogeneration facility. The revised definition will include thermal energy that a Solid Oxide Fuel Cell system uses with an integrated steam hydrocarbon reformation process for production of fuel for electricity generation. The proposal clarifies that “the thermal energy produced by a Solid Oxide Fuel Cell that then uses the thermal energy it produces to reform methane and produce hydrogen for electricity generation is useful thermal energy that would enable a facility powered by such fuel cells to be certified as a cogeneration QF.

FERC also explained that the NOPR only applies to Solid Oxide Fuel Cell systems with integrated natural gas reformation that use natural gas to produce hydrogen and generate electricity through steam from the power generation process to reform the natural gas and produce the hydrogen that the Solid Oxide Fuel Cell systems use to generate electricity.

FERC’s NOPR requests comments on the proposed revisions 30 days from the date of the NOPR’s publication in the Federal Register. FERC encourages comments to be filed electronically via the eFiling link on FERC’s web site at http://www.ferc.gov.

Click here to read the NOPR.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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