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FERC updates PURPA regulations to allow fuel cells to qualify as cogenerators


Rule responds to Bloom Energy petition

Expands eligibility beyond solid oxide fuel cells

With an eye on keeping pace with technological advancements, the Federal Energy Regulatory Commission has given its nod for fuel cell systems to qualify for favorable rates under the Public Utility Regulatory Policies Act.

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Under the law enacted in 1978, utilities must purchase power from qualifying facilities — typically small cogeneration and renewable power plants — at the full avoided cost of replacing that power with other generation.

Cogeneration facilities are statutorily defined as facilities that produce both electric energy and forms of useful energy such as heat that are used for industrial, commercial, heating or cooling.

Fuel cell systems with integrated hydrocarbon reformation equipment use a combustion-free process to convert methane within natural gas into hydrogen, which is then used to generate electricity.

In a final rule (RM21-2) issued Dec. 17, the commission revised its implementing rules for PURPA to clarify 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 hydrogen to be used, ultimately, as fuel for electricity generation."

Thus, fuel cell systems with integrated hydrocarbon reformation equipment can be cogeneration facilities under PURPA, FERC found, noting the technical evolution of cogeneration.

"By updating our PURPA regulations, the commission once again ensures that outdated rules and regulations don't disadvantage new technologies that in some cases didn't even exist at the time the rules were promulgated," Commissioner Neil Chatterjee said Dec. 17 during the monthly FERC meeting, which continues to be held virtually due to the coronavirus.

The final rule was prompted by an August petition from Bloom Energy focused on incorporating solid oxide fuel cell systems into the PURPA regulations

Bloom contended in its petition that solid oxide fuel cell systems met a two-part statutory test under PURPA for qualifying as a QF in that they produce heat and steam for industrial purposes while also generating electricity. But the Edison Electric Institute, an investor-owned utility trade group, fought the petition, contending Bloom's fuel cell technology produces excess heat that is only used to generate more electricity — akin to how natural gas-fired combined cycle turbines operate — and therefore cannot be considered cogeneration.

Fuel cell eligibility

FERC sided with Bloom, issuing a notice of proposed rulemaking on Oct. 15. The final rule follows that proposal, but with one modification. FERC listened to comments from fuel cell system operator FuelCell Energy and agreed that the updated PURPA regulations should not limit the type of eligible fuel cells to only solid oxide fuel cells.

"The commission has not endorsed specific types of solar panels, for example, in defining small power production facilities," the Dec. 17 order said. "Here, as FuelCell Energy recognizes, the focus should be on the integrated use of waste heat for reforming hydrocarbons to produce hydrogen to fuel a fuel cell, instead of the specific fuel cell technology utilized to accomplish that goal (i.e., solid oxide or carbonate)."

The final rule will take effect 60 days after its publication in the Federal Register.