US PURPA 18 CFR 292 Qualifying Facility Solar Purchase Rules Guide

Key Takeaways

• Qualifying small power production facilities under 18 CFR 292.204 have a maximum 80 MW capacity (August 2026).
• These facilities must use 75 percent or more renewable/solar energy as their primary source (August 2026).
• Electric utilities have a mandatory purchase obligation from qualifying facilities under 18 CFR 292.303(a) (August 2026).
• Standard rates are mandatory for solar facilities 100 kW or less under 18 CFR 292.304(c)(1) (August 2026).

Understanding PURPA and 18 CFR Part 292 for Solar Facilities

The Public Utility Regulatory Policies Act of 1978 (PURPA) established a framework for electric utilities to purchase power from certain non-utility generators. The Federal Energy Regulatory Commission (FERC) implemented these rules under Title 18 Code of Federal Regulations (CFR) Part 292. These regulations define qualifying small power production facilities and outline the purchase obligations of electric utilities.

For solar facilities, 18 CFR Part 292 provides specific criteria for qualification and rules governing the sale of electricity. These rules aim to encourage small power production and cogeneration. State public utility commissions (PUCs) and nonregulated electric utilities implement these federal PURPA rules.

Qualifying as a Small Power Production Facility (18 CFR 292.204)

To qualify under 18 CFR 292.204, a solar facility must meet specific criteria. It is categorized as a "small power production facility." The regulation specifies a "maximum 80 MW capacity" for such facilities. Additionally, the primary energy source of the facility must be "75 percent or more renewable/solar energy." This ensures that the facility contributes to renewable energy generation.

Electric Utility Purchase Obligation (18 CFR 292.303)

A core component of PURPA is the "mandatory electric utility purchase obligation." Under 18 CFR 292.303(a), "Each electric utility shall purchase" power from qualifying facilities. This obligation is carried out "in accordance with § 292.304." There are specific exemptions outlined in § 292.309 and § 292.29.

Purchase Rates and Avoided Costs (18 CFR 292.304)

The rates at which electric utilities purchase power from qualifying facilities are governed by 18 CFR 292.304. These "Rates for purchases shall: (i) Be just and reasonable to the electric consumer." A rate meets this requirement if it "equals the avoided costs." Avoided costs represent the incremental costs an electric utility avoids by purchasing power from a qualifying facility instead of generating it itself or buying it from another source.

It is important to note that "Nothing in this subpart requires any electric utility to pay more than the avoided costs for purchases." Avoided costs can be calculated "at the time the obligation is incurred" or "at the time of delivery." There is a "rebuttable presumption that a state regulatory authority or nonregulated electric utility may use a Locational Marginal Price" for these calculations.

Mandatory Standard Rates for Facilities 100 kW or Less (18 CFR 292.304)

For smaller solar installations, 18 CFR 292.304 includes provisions for "mandatory standard rates for solar facilities 100 kW or less." Specifically, "There shall be put into effect (with respect to each electric utility) standard rates for purchases from qualifying facilities with a design capacity of 100 kilowatts or less." This provision simplifies the process for small-scale renewable energy producers.

For facilities with a design capacity "of more than 100 kilowatts," standard rates "may be put into effect" but are not mandatory. Qualifying facilities can sell energy "either as available or pursuant to a legally enforceable obligation." These "legally enforceable obligation" terms include the duration, termination notice requirements, and sanctions for non-compliance.