I’ve worked at a PURPA “Shark”. That was the name for small NUG’s that were built in California in the 80’s and 90’s in response to the very attractive “avoided cost” set by the State of California.

The key question is “What is the avoided cost?”. Remember, the “avoided cost” was meant to be the cost of the power plant not built and operated by the utility due to the NUG supplied power. This becomes a political issue, generally settled by state legislatures and rate commissions.

If properly done, it is a good way to encourage innovation and efficiency. If not, it either leads to “Sharks” (the plant I worked at was, by 1995, receiving OVER the residential rate for power being sold to the utility wholesale, we were, in effect, being subsidized. Or, the utility can get (they have considerable political power) “avoided costs” set low enough to prevent “competition” from NUGs.

If the Utility was deploying FF modules, they would likely argue (with some merit) that the avoided cost was the cost of FF generated power.