Could Pairing Storage + Renewables Change a Qualifying Facility’s Status?

The Federal Energy Regulatory Commission (FERC) is currently considering whether pairing energy storage with a wind power project could change that facility’s status in FERC Docket No. EL18-195-000. In August 2018, Northwestern Energy petitioned FERC to revoke qualifying facility (QF) status from four Beaver Creek Wind II, LLC (“Beaver Creek”) wind-plus-battery projects under the Public Utility Regulatory Policies Act (PURPA). FERC has limited experience squaring energy storage with PURPA. In the 1990 case Luz Development and Finance Corp., FERC found that a battery storage project could receive QF status. Specifically, FERC found that “battery system[s] … are a renewable resource for purposes of QF certification” and battery storage facilities may be certified as QFs, subject to meeting PURPA’s fuel use requirements. FERC now must consider whether wind generation facilities paired with storage should be treated as a single QF and if so, how a QF’s aggregate capacity should be calculated.

Congress enacted PURPA in response to the U.S. energy crisis of the early 1970s, seeking to promote conservation and increased use of domestic renewable energy resources. The latter purpose was accomplished by creating a class of qualifying “small power production” and “cogeneration” facilities eligible to receive special rate and regulatory treatment (i.e. QFs). A facility is eligible to be a “small power production” QF if its primary energy source is renewable (hydro, wind or solar), biomass, waste, or geothermal and 75 percent or more of the total energy input is from these sources. Additionally, a small power production QF’s capacity must not exceed 80 MW.

In calculating a QF’s power production capacity, the aggregated capacity of other small power production facilities is also included if those facilities use the same energy resource; are owned by the same person or its affiliates; and are located at the same site. In determining whether two or more facilities are located at the same site, FERC’s regulations specify that a facility located within one mile of the facility for which QF status is sought is deemed to be “located at the same site.”

In its petition, Northwestern Energy argues that Beaver Creek’s integration of energy storage results in the wind projects exceeding the 80 MW capacity limit for QF status. Beaver Creek argues that each of the paired projects can be considered a single QF because they will be controlled by software systems that ensure the storage facilities are only charged by wind energy from the adjacent turbines and each project’s total power discharge would be less than 80 MW. Beaver Creek further argues that battery storage “simply provides a time-shifting of the wind production and not additional generation.”

While this petition is pending, FERC is also considering a more comprehensive review of PURPA. In testimony before the Senate Committee on Energy and Natural Resources, Chairman McIntyre directed FERC staff to re-initiate a review of FERC’s policies under PURPA, which will build on the record that FERC already developed and allow for additional robust stakeholder input. Time will tell if, or how, FERC will integrate its review of QF treatment of energy storage paired with wind into its comprehensive review of PURPA.