A legal challenge has been initiated in the U.S. Court of Appeals for the D.C. Circuit against the Federal Energy Regulatory Commission’s (FERC) recent orders that approved the Southwest Power Pool’s (SPP) capacity accreditation methodologies. The lawsuit, filed by the Sierra Club, the Natural Resources Defense Council (NRDC), and the Sustainable FERC Project, alleges that SPP’s rules create an uneven playing field that favors fossil fuel generators and penalizes renewable energy like solar and wind power.
The core of the dispute is how SPP, the grid operator for 17 states in the central U.S., calculates the reliable capacity value of different energy sources. The complainants argue that the approved methodology accounts for the variability of solar and wind resources while largely ignoring the frequent outages experienced by coal and gas plants, especially during extreme weather events.
The environmental groups argue that this disparity constitutes “undue discrimination” under the Federal Power Act. By downplaying the risk of fossil fuel failures and overstating their reliability, SPP’s methodology artificially inflates the capacity value of conventional resources. Consequently, utilities and load-serving entities are financially incentivized to procure more gas and coal capacity to meet resource adequacy requirements, while more cost-effective solar and wind projects are undervalued.
For the solar industry, the direct impact is a competitive disadvantage in the wholesale market. Biased accreditation schemes can lead to lower capacity payments for solar developers, affecting project financing and viability. Furthermore, it exacerbates existing interconnection queue backlogs for hundreds of gigawatts of clean energy projects by promoting new fossil fuel additions ahead of them.
The Sierra Club argues that renewables have demonstrated reliability during recent extreme weather, outperforming some fossil plants. The lawsuit seeks a court order to force FERC to enforce fair market rules, which advocates say are essential for a reliable, cost-effective, and clean energy transition. The outcome of the case will determine if grid operators must adopt a technology-neutral approach that reflects the actual performance of all resources during high-risk periods.
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