Solar Power Plant Siting, Construction, and Regulation Overview (7)
If the plant will be located on state land, the developer may be required to follow a state energy facility siting procedure. The process for obtaining a permit on state land differs from state-to-state, but each generally includes an application process, a time for public comment, and a process for appeals.
Power Plant Siting, Construction, and Regulation Overview Process
7.1 to 7.2 – Is the Facility a Cogeneration Facility or a Small Power Production Facility?
If the facility is a cogeneration facility or a small power production facility, the developer may apply for Certification as a Qualifying Facility under Public Utilities Regulatory Policy Act (PURPA) and receive special rate and regulatory treatment. A cogeneration facility is a generating facility that sequentially produces electricity and another form of useful thermal energy (such as heat or steam) in a way this is more efficient than the separate production of both forms of energy. A small power production facility is a generating facility that is 80 megawatts or less with a primary energy source (i.e. at least 75%) of hydro, wind, solar, biomass, waste, or geothermal resources. Qualifying Facilities have the right to sell energy to public utilities at the "avoided cost" rate (i.e. the cost to the public utility to produce the energy itself), provided FERC has not relieved the utility from its purchase obligation under 18 CFR 292.309. Under USC 824a-3(m) after August 8, 2005, no electric utility shall be required to enter into a new contract or obligation to purchase electric energy from a qualifying cogeneration facility or a qualifying small power production facility if FERC finds that the qualifying cogeneration facility or qualifying small power production facility has nondiscriminatory access to:
- Independently administered, auction-based day ahead and real time wholesale markets for the sale of electric energy wholesale markets for long-term sales of capacity and electric energy; or
- Transmission and interconnection services that are provided by a FERC approved regional transmission entity and administered pursuant to an open access transmission tariff that affords nondiscriminatory treatment to all customers and competitive wholesale markets that provide a meaningful opportunity to sell capacity, including long-term and short-term sales, and electric energy, including long-term, short-term and real-time sales, to buyers other than the utility to which the qualifying facility is interconnected. In determining whether a meaningful opportunity to sell exists, the Commission shall consider, among other factors, evidence of transactions within the relevant market; or
- Wholesale markets for the sale of capacity and electric energy that are, at a minimum, of comparable competitive quality as markets described in the options above.
Qualifying Facilities also have the right to purchase supplementary power, backup power, maintenance power, and interruptible power at reasonable rates from public utilities. Finally, certain Qualifying Facilities including geothermal small power production facilities are exempt from specific statutes and regulations, including:
- The Public Utility Holding Company Act of 2005 (PUHCA);
- The Federal Power Act (expect sections 205 and 206 on "just and reasonable" rate approval); and
- State laws and regulations respecting the rates and financial and organizational aspects of utilities.
- Note - Qualifying Facilities under 20 megawatts are exempt from the entire Federal Power Act, including sections 205 and 206.
Until June 2011, projects in California that were over 1.5 MW but under 20 MW were considered Qualified Facilities (QFs) under PURPA's mandatory purchase requirement and exempt from state regulation. In June 2011, FERC approved a December 2010 California Public Utilities Commission Settlement Agreement establishing a "QF/CHP (Combined Heat and Power) Program. The settlement agreement terminated the PURPA mandatory purchase option in accordance with 18 CFR 292.309, and replaced it with various QF purchase options including a PPA for new QFs under 20 MW.
7.3 to 7.4 – Is the Facility an Independent Power Producer That Exclusively Sells to Wholesale Customers?
If the power plant is an independent power producer, the plant may be exempt from certain federal regulations. The Energy Policy Act of 1992 created an exemption from the Public Utility Holding Company Act (PUHCA) for ‘Exempt Wholesale Generators’ (EWG). EWGs include independent power producers that sell energy only to wholesale customers and are not QFs. . For EWGs to maintain their status they must restrict sale agreements to wholesale sales. Like, Qualifying Facilities over 20 megawatts, EWGs are subject to FERC regulations on rate approval under section 205 of the Federal Powers Act. However, unlike Qualifying Facilities, EWGs may not take advantage of retail sale opportunities in local jurisdictions.
7.5 to 7.6 - Will the Facility Require a State Energy Facility Siting/Construction Permit?
Some states require siting approval or a permit to construct for energy facilities from a state Public Utilities Commission or similar state or local agency. Below is a list of states that require some type of siting permission.
If the developer is constructing a thermal power plant with a capacity of 50mw or more, a permit must be obtained from the California Energy Commission (CEC).
7.7 to 7.9 – Will the Facility Require a CPCN from a State Public Utility Regulatory Authority?
If the facility will be regulated by a state public utility regulatory authority, the facility may need to a Certificate of Public Convenience and Necessity (CPCN). The CPCN generally is necessary to establish a public need for the facility and the developer’s ability to fill that need. Some states do not regulate independent power producers if they do not sell power directly to the public because states will only regulated developers that fall within the states’ definition of “public utility”. The state utility regulatory authority will also regulate developers who are public utilities whom will likely be required to obtain a CPCN. In general, if a facility sells its power to the public, the facility is considered a state "public utility" for the purposes of regulation by the state public utility regulatory body. This typically requires the regulatory body to issue a CPCN for its construction.
Any electric public utilities proposing to construct an electric generating facility 50 MW or greater (including any electrical corporation as defined in California Public Resource Code Section 218(a) and (b)) that performs a service for, or delivers a commodity to, the public or any portion thereof for which any compensation or payment is received is a public utility subject to California Public Utilities Commission and must apply for a Certificate of Public Convenience and Necessity under General Order 131-D Section III. Additionally, when any person or corporation performs any service for, or delivers a commodity to, any person, private corporation, municipality, or other political subdivision of the state, that in turn either directly or indirectly, mediately or immediately, performs that service for, or delivers that commodity to, the public or any portion thereof, is also a public utility subject to California Public Utilities Commission and must apply for a Certificate of Public Convenience and Necessity under General Order 131-D Section III to construct an electric generating facility 50 MW or greater.
Developers must obtain a Certificate of Public Convenience and Necessity (CPCN) from the Public Utilities Commission of Nevada (PUC) if they qualify as a “public utility” and are seeking to develop energy generation facilities. The term “public utility” includes “any plant or equipment, or any part of a plant or equipment, within this State for the production, delivery or furnishing for or to other persons, including private or municipal corporations, heat, gas, coal slurry, light, power in any form or by an agency, water for business, manufacturing, agricultural or household use, or sewerage service, whether or not within the limits of municipalities.” [[NRS 704 - Regulation of Public Utilities Generally
| NRS 704.020(2)(a)]]. Therefore, developers who intent to sell energy wholesale directly to public utilities, cities, or counties do not have to obtain a CPCN.
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