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Federal Register / Vol. 86, No. 22 / Thursday, February 4, 2021 / Rules and Regulations 30. The statutory definition of cogeneration facilities requires only that a cogeneration facility produce i electric energy, and ii steam or forms of useful energy such as heat which are used for industrial, commercial, heating or cooling purposes . . . . 48
This definition explicitly provides for steam or other forms of useful energy to be used for an industrial purpose.
Because, as described above, a fuel cell system with an integrated hydrocarbon reformation process creates useful thermal energy in that it is used for an industrial purposehere, producing a commercially valuable fuel, hydrogen it fits within this statutory definition.
Phrased differently, fuel cell systems with integrated hydrocarbon reformation equipment produce two forms of useful energy: Electric energy and heat/steam thermal energy which can be used to produce hydrogen from which chemical energy can be used to produce electric energy.
31. Currently, the Commissions PURPA Regulations as adopted in 1980
provide that a topping-cycle cogeneration facility is a cogeneration facility in which the energy input to the facility is first used to produce useful power output and at least some of the reject heat from the power production process is then used to provide useful thermal energy.49 Fuel cell systems with integrated hydrocarbon reformation equipment convert the chemical energy of the methane within natural gas into hydrogen and, ultimately, electricity using a steam-methane reformation process,50 which converts the natural gas input to hydrogen, which reacts with oxygen in the fuel cell to produce electricity. The by-product of the fuel cells production of electricity is heat and steam, some of which is used in the integrated hydrocarbon reformation process to convert more natural gas into hydrogen, which the fuel cells use, in combination with oxygen from the air, to produce electricity.
32. A cogeneration facility is, per the statute, one that produces electric
energy as well as steam or forms of useful energy such as heat which are used for industrial, commercial, heating or cooling purposes. 51 Consistent with this language, fuel cell systems with integrated hydrocarbon reformation equipment do exactly that and thus can be cogeneration facilities. Fuel cells, as noted above, generate two forms of useful energyelectricity and the heat/
steam thermal energy that is used to produce hydrogen. The Commission thus amends its PURPA Regulations to provide that the production of heat/
steam by a fuel cell system with an integrated hydrocarbon reformation process to produce hydrogen yields a useful thermal energy output made available to an industrial process that entitles such a system, consistent with the statutes requirements for a cogeneration facility, to be considered a topping cycle cogeneration facility that can qualify, subject to meeting the other relevant requirements,52 to be a QF. The technological advances in fuel cells that have occurred since 1980 were neither known nor anticipated when the Commission adopted its original definitions for useful thermal energy, but that fact should not stand in the way of the Commission now recognizing such advances and responding accordingly.53
33. In sum, recognizing technological advancements over the past 40 years and Congresss commitment to continuing progress in the development of efficient electric energy generating technology, 54 and in light of the development and commercialization of fuel cell systems with integrated hydrocarbon reformation equipment since the original adoption of the PURPA
Regulations, we amend section 292.202h of the PURPA Regulations by adding a new paragraph to provide that useful thermal energy output includes the thermal energy that is used by a fuel cell system with an integrated steam hydrocarbon reformation process for
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use of natural gas in the reformation process but also use of other hydrocarbons such as bio-gas.
48 16 U.S.C. 79618A.
49 18 CFR 292.202d.
50 As explained in the NOPR, and described again above, industrial gas manufacturers also produce hydrogen from natural gas using a steam-methane reformation process but must produce their own steam, usually through combustion of some of the input natural gas. Because the buyers of the resulting hydrogen are usually remote from the industrial gas manufacturer, this hydrogen is either compressed or liquified in order to transport the hydrogen to the end user. Integrating the hydrocarbon reformation process into a fuel cell system increases efficiency and avoids the energy loss of external reformation and compression or liquefaction for surface transportation.

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U.S.C. 79618.
18 CFR 292.203b, 292.205. If the facility is a new cogeneration facility that seeks to sell electric energy pursuant to PURPA section 210, it will also need to meet the additional requirements applicable to such facilities. 16 U.S.C. 824a3n; 18
CFR 292.205d.
53 We recognize that, in EG&G, Inc., the Commission stated that, for cogeneration, the use of thermal energy must be completely independent of the power production process. EG&G, Inc., 16
FERC at 61,104. Even aside from the fact that that order did not involve fuel cells, it was issued under the regulations then effective, which we revise here.
See id. at 61,10304. In short, it was based on the regulations as adopted in 1980, and it has now been overtaken by the change in the PURPA Regulations adopted today.
54 16 U.S.C. 824a3n1Aiii.
52 See
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production of hydrogen to be used, ultimately, as fuel for electricity generation.
34. We also note that the thermal energy output, i.e., the waste heat, from the fuel cell that is used to reform natural gas into hydrogen fuel is used in a sequential process to create additional electricity and is more efficient and uses less fuel than fuel cells without integrated fuel reforming systems. This technology did not exist when the Commission established the regulations in Order No. 70. In this final rule, we now update our cogeneration regulations to include fuel cells with an integrated steam hydrocarbon reformation process. Combined-cycle electric generation, while admittedly a more efficient form of electric generation than, for example, a combustion turbine, is still not the same thing as a fuel cell system with an integrated steam hydrocarbon reformation process and does not warrant being identified as a qualifying facility.
35. FuelCell Energy argues that the NOPR proposal endorsed a specific technology, solid oxide fuel cells, instead of establishing standards that would apply to all similar fuel cells. We agree. The Commission has not endorsed specific types of solar panels, for example, in defining small power production facilities. Here, as FuelCell Energy recognizes, the focus should be on the integrated use of waste heat for reforming hydrocarbons to produce hydrogen to fuel a fuel cell, instead of the specific fuel cell technology utilized to accomplish that goal i.e., solid oxide or carbonate. As such, we modify the proposed definition in the NOPR to state that useful thermal energy output includes the thermal energy that is used by a fuel cell system with an integrated steam hydrocarbon reformation process for production of fuel for electricity generation.
36. Finally, as we have noted above, we reiterate that new cogeneration facilities seeking to sell electric energy pursuant to PURPA section 210 must meet the additional requirements imposed by PURPA section 210 and the implementing regulations, that the thermal energy output . . . is used in a productive and beneficial manner 55
and that the electrical, thermal, chemical and mechanical output of the cogeneration facility is used fundamentally for industrial, commercial, residential or institutional purposes and is not intended fundamentally for sale to an electric 55 18

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CFR 292.205d1.

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