On September 9, 2025, in a closely watched case for the solar and other renewable power industries, the U.S. Court of Appeals for the D.C. Circuit upheld the Federal Energy Regulatory Commission’s certification of the Broadview Solar project in Montana as a “small power production facility” under the Public Utility Regulatory Policies Act of 1978 (PURPA). The ruling has notable implications for how developers design solar-plus-storage projects—and how investors evaluate them—when navigating PURPA’s 80-megawatt (MW) cap on “power production capacity” for “qualifying facility” status.
배경
PURPA gives certain small renewable energy projects significant benefits, including a guaranteed right to sell power to utilities at avoided cost rates. But to qualify as a “small power production facility” under PURPA, a facility must have a “power production capacity” no greater than 80 MW. The fight in the Broadview litigation was over what that term means, especially when solar projects include battery energy storage systems.
The dispute arose from the development of the Broadview Solar project, a solar-plus-storage facility comprised of 160 MW DC (direct current) of solar panels, 50 MW of DC battery storage that can discharge for up to four hours, and inverters that can output no more than 80 MW of AC (alternating current) power to the grid at any given time, whether from the solar array, the battery, or some combination thereof. Under PURPA, facilities with a “power production capacity” greater than 80 MW cannot be “small power production facilities” and, therefore, they lose the valuable right to compel utilities to purchase their output. FERC initially denied Broadview’s certification as a “small power production” QF, focusing on the facility’s 160 MW aggregate module rating, but later reversed itself on rehearing by applying its longstanding “send‑out” approach, which measures “power production capacity” by maximum AC power deliverable to the grid.
In 2023, the D.C. Circuit initially upheld FERC’s decision on rehearing under Chevron deference—where courts would defer to a federal agency’s reasonable interpretation of an ambiguous statute that the agency administers, meaning that if Congress had not clearly addressed an issue in the statutory text, courts would usually uphold the agency’s reading as long as it was reasonable, even if the court might have interpreted the statute differently on its own. Challengers then petitioned the Supreme Court for review on whether FERC’s interpretation of “power production capacity” was correct and whether it deserved Chevron deference. While that petition was pending, the Supreme Court decided Loper Bright Enterprises v. Raimondo (2024), which overruled Chevron and instructed courts to use independent judgment to interpret statutes without deferring to agency interpretations. In light of Loper Bright, the Supreme Court granted the challengers’ petition, vacated the D.C. Circuit’s earlier decision, and remanded the case for the D.C. Circuit to reconsider without Chevron deference. Here, on remand, the D.C. Circuit again upheld FERC’s decision—this time based on its own independent reading of PURPA’s statutory text and context.
The decision remains subject to further appeal should the losing parties here, including NorthWestern Energy and the Edison Electric Institute, decide to request review by the D.C. Circuit en banc or by the U.S. Supreme Court. Given the long history of this proceeding and the stakes involved, further appeal seems likely.
법원의 판결
Without giving Chevron deference to FERC in light of Loper Bright, the court interpreted the statute directly and the majority held that “power production capacity” is “best read to refer to the [maximum net] amount of AC power that the facility can send out to the grid” at any one time, not the maximum DC capability of a subcomponent like the solar array. “That reading accounts for all the facility’s components working together, not just the maximum capacity of one subcomponent, and it appropriately focuses on grid-usable AC power,” the majority explained. Because Broadview’s inverters physically cap instantaneous AC output to 80 MW, the facility meets PURPA’s maximum size limit and qualifies for QF status, even though the facility can store additional energy for later delivery. The majority therefore aligned with FERC’s long-standing “send-out” approach, which looks at net output to the grid, not gross generation capability.
Judge Justin R. Walker again dissented, arguing that the 50 MW of DC power sent to the battery should count as “produced” power, on top of the 80 MW delivered directly to the grid, giving Broadview a total capacity of 130 MW. Thus, in his view, the project is too large for QF status. Interestingly, Judge Walker’s dissent discussed other possible uses of generated energy prior to it reaching the grid, such as for “an on-site factory” or “next-door data center,” implying that such usage should be counted as part of a facility’s power production capacity.
Key Takeaways for Project Developers and Financing Parties
- Design Flexibility for Solar (and Other Renewable Energy Generation) + Storage. Though the decision can still be appealed, for now it affirms that developers can “oversize” DC solar arrays relative to inverter capacity, and add significant amounts of battery storage—without losing eligibility for QF status, as long as inverter output to the grid never exceeds 80 MW AC. This also applies to other forms of renewable power generation, as long as maximum output to the grid does not exceed 80 MWac net to the point of interconnection. This validates a common engineering strategy to increase capacity factors and better utilize inverter capacity without jeopardizing eligibility for QF status.
- Physical Limits Matter. What counts is the facility’s maximum deliverable AC power to the grid at any given time. This puts a premium on the physical design and operational limits engineered into the facility. Properly documented, these limits can be central to maintaining eligibility for QF status, as the decision makes clear that adding batteries upstream of the inverters—even with substantial storage discharge capability—will not disqualify a project so long as physical and operational constraints keep maximum AC export to the grid at or below 80 MWac (net to the point of interconnection). This is especially relevant as storage continues to be integral to project value and revenue models.
- Financing Confidence. For lenders and tax equity investors, the decision reduces a key legal uncertainty for solar + storage projects sized near PURPA’s statutory maximum size. This can improve bankability, as mandatory utility purchase obligations—and the associated revenue certainty— can be critical to the financial viability of a project, particularly in regions or market conditions where merchant sales carry more risk. The decision enhances confidence for tax equity providers, lenders, and other capital partners that engineering solutions to shape AC “send‑out” are a viable and lawful path to preserve PURPA benefits, although the prospect of further appellate review remains at the moment.
- Regulatory Stability and Consistency. Because FERC had briefly abandoned—and then reinstated—its long‑standing “net‑output” approach in an earlier phase of the Broadview proceeding, and because of the remand after Loper Bright, the industry has faced uncertainty about how “power production capacity” would be calculated. This decision, especially post-Loper Bright and without relying on Chevron deference, provides additional confidence to the market that the current approach is less vulnerable to agency re-interpretation giving developers and capital providers more clarity for project planning and financing. Nonetheless, full confidence may not arrive until either the period for appeal (generally 90 days) has elapsed without action or until the Supreme Court takes final action on a requested appeal.
- Signals for State‑Level and Other Federal Programs. While the decision interprets PURPA, its emphasis on instantaneous AC “send‑out” capacity could influence how other programs or regulators assess maximum facility size for eligibility for certain regulatory programs or benefits, tax credits, or interconnection rules. As such, this ruling may become persuasive beyond PURPA disputes at FERC.
- Future Challenges. Although this is a win for the solar industry, Judge Walker’s reasoning in his dissent—would count DC power sent to batteries as part of “production capacity”—could reappear in other cases, proceedings, or legislative debates, particularly as battery storage continues to play a significant role in renewable energy deployment. Parties opposing QF certification for similar facilities may continue to argue for that view, especially for large energy complexes developed in phases. As such, developers and investors should expect continued scrutiny of both facility design and interconnection arrangements and should continue to track how “power production capacity” is treated in other jurisdictions or under other programs, as well as in any further appeal arising from this decision.
Bottom Line: For the solar + storage sector and renewable energy project development in general, the decision is a significant win and welcome news. It confirms, at least for now, that when structuring projects where QF status is important, instantaneous AC output is what matters, not aggregate solar module or battery capacity, when determining the maximum “power production capacity” of a project. Thus, thoughtful sizing strategies consistent with FERC’s most recent Broadview order and this decision remain viable tools to optimize capacity factors and project economics, with the comfort that QF status and PURPA benefits will remain available for projects that qualify.
The Foley team will continue to monitor developments in this area. Please reach out to one of the team members identified below with any questions.
