Yesterday, FERC issued an order on a Petition for Declaratory order from Sunrun, asking that FERC waive 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 that Sunrun provides financing for but which the homeowner has an option to purchase, where such 20 kW or less systems may aggregate to over 1 MW within a one-mile radius; and that in a Form No. 556 submitted for a cluster of rooftop PV systems that exceeds 20 kW, the Commission waive the requirement in Item 8a of Form No. 556 to include information regarding the facilities covered by the first requested waiver (i.e., 20 kW or less facilities), even if they are within one mile of the cluster that exceeds 20 kW that is being certified).

Although the Petition garnered minimal opposition, largely in the form of requests to delay action until (anticipated) PURPA reform occurred, FERC chose to act. FERC granted both waivers, agreeing with prior statements that solar generation facilities installed at residences or other relatively small electric consumers such as retail stores, hospitals, or schools do not present a compelling need for QF registration. The burden of such filings was considered to be too great in light of the lack of benefits. The second waiver was granted for similar reasons, as the fact that new client homeowners are added frequently and existing client homeowners may at any time exercise their option to purchase their 20-or-less kW PV systems would create a major burden on entities with business models such as Sunrun.

The reality is that this waiver largely initially will impact California, were solar rooftop mandates and housing density could lead to the need for the waiver in the short term. New housing developments that opt for “solar for all” in other states also could be impacted. As other states drive toward de-carbonization and follow some California approaches, the waiver will become more meaningful. The waiver, however, does not necessarily mean that more small QFs will be participating in markets through aggregation. Net metering still remains by far the most popular option for QFs of this size. That said, in many states the cost of interconnections for net metered entities may not cover the costs of studies needed to analyze the distribution system impacts of an entire solarized housing community and debates about subsidies will arise once again. This is an issue states with which state commissions will have to deal.

Aggregation and market participation of such small QFs raises a host of federal jurisdictional issues, as any QF selling FERC-jurisdictional products (i.e., products other than demand response) interconnected to a FERC-jurisdictional utility’s distribution system must take FERC-jurisdictional interconnection service, even if that means switching to a new interconnection agreement, if the QF was initially interconnected under a state net metering program’s interconnection tariff. It will be more interesting to watch if aggregators challenge this FERC precedent or seek a waiver of it. Currently, no power may be sold from a QF to an entity other than the interconnected utility without the interconnection service being provided under FERC’s authority, as FERC decided almost thirty years ago, in a case that was upheld by the D.C. Circuit.