FERC grants QF rule waiver for distributed solar developer

Last month federal regulators issued an order that could facilitate the development of small-scale distributed solar projects. The Federal Energy Regulatory Commission's April 18, 2019 order granting certain waivers to residential solar developer Sunrun, Inc. could open the door to reduced administrative burdens for developers of clustered residential-scale solar projects.

Under the federal Public Utility Regulatory Policies Act of 1978 (PURPA), certain electrical generators can be certified as "qualifying facilities" or QFs if they meet defined standards. QFs can avail themselves of benefits under federal law, such as the right to sell energy and capacity to utilities, as well as exemptions from certain other federal laws.

The Federal Energy Regulatory Commission's regulations generally require a facility to file a Form No. 556 for self-certification or to apply for Commission certification in order to be a QF. But for generating facilities with net power production capacities of 1 MW or less, the Commission's Order No. 732 created an exemption, such that those facilities are not required to file either a notice of self-certification or an application for Commission certification in order to qualify as a QF.

The Commission's regulations also include what is commonly referred to as the "one-mile rule," under which a small power production facility located within one mile of another small power production facility that uses the same energy resource and has the same owner is considered to be the same facility for purposes of determining if the facility exceeds the 80 MW limit on a small power production QF. In a pair of rulings known as SunE B9 and SunE M5B, the Commission found that the one-mile rule should also be used to determine whether the exemption from the QF certification filing requirement is applicable for QFs that are 1 MW or less.

On September 24, 2018, residential-scale solar developer Sunrun, Inc. filed a petition to the Commission requesting waivers of qualifying facility certification filing requirements, including the rule requiring identification of other generating facilities within one mile with at least 5 percent common ownership. Sunrun's business model allows its client homeowners to buy and own the photovoltaic systems installed by Sunrun, but also offers an option whereby Sunrun will finance, own, and maintain the system. In its petition to the Commission, Sunrun expressed concern that the PV systems Sunrun owns will collectively, as a cluster, be deemed to be owned by the same person for purposes of the Commission’s one-mile rule, under which QFs that are owned by the same entity or an affiliated entity and are located within one mile of each other are considered to be one QF (and therefore are limited to 80 MW in the aggregate).

On April 18, 2019, the Commission issued an order granting Sunrun's petition for declaratory order. The Commission found that granting Sunrun waiver of the QF certification filing requirements for separately-interconnected, individual residential rooftop solar PV systems and related equipment with maximum net power production of 20 kW or less for which Sunrun provides financing, "aligns with the purpose of the 1 MW filing exemption, which was set forth to ease the administrative burden for both the Commission and small scale QFs." The Commission also granted waiver of the requirement to submit a list of affiliated generation within one mile when filing Form No. 556 for Sunrun-owned clusters of residential PV systems of 20 kW or less located within one mile.

On its face, the ruling applies only to Sunrun and is limited in scope to the waivers Sunrun had requested. But the order suggests the Commission could be willing to grant similar waivers for other developers who aggregate significant amounts of small-scale residential or other distributed solar projects, which could help reduce the administrative burden on project developers and thereby could make solar more accessible to homeowners.