Move an oven rack to the middle position and preheat oven to 300°F. Line a large plate with paper towels. Place a wire rack inside a rimmed baking sheet and place in the oven. Prepare a large plate lined with paper towels.
In a food processor fitted with a shredding disc, or with a box grater, shred the potatoes and onions. Pour on to a clean kitchen towel.
Gather the towel around the potatoes and onions and squeeze over a sink or bowl to extract as much liquid as possible. Transfer the shredded potatoes and onions to a large bowl.
Stir in eggs, flour, baking powder, 1 teaspoon salt, and 1/2 teaspoon pepper. Mix until uniformly combined (I like to use my hands).
Heat oil in a large cast-iron or other heavy duty skillet to 325 degrees. Drop heaping rounded tablespoons of the shredded potato mixture in to the oil and flatten with a heatproof utensil. Do not overcrowd.
Fry until golden brown on one side, 2 to 3 minutes, then carefully flip using a fish turner or other heatproof spatula. Continue to cook until the second side is golden brown and crusty, 1 to 2 minutes longer. Transfer to the plate lined with paper towels to drain.
Repeat with remaining shredded potato mixture until all potato pancakes are cooked (you should have about 24 potato pancakes). Transfer to a baking sheet and place in the preheated oven to keep warm until serving time. Garnish with fresh chives and serve with applesauce and sour cream.