Analysts Fret About ‘Scandal Waiting to Happen’ as Puerto Rico Begins Drive for 100% RE
Puerto Rico legislators have opened hearings on a bid to end the monopoly status of the island’s bankrupt utility, the Puerto Rico Electric Power Authority (PREPA) and set a 2050 deadline for hitting a 100% renewable energy target. But the measure might just be “another scandal waiting to happen,” the Institute for Energy Economics and Financial Analysis cautions.
Utility Dive notes that PREPA is still rebuilding after Hurricane Maria destroyed most of its grid last year. While power has been restored, the full recovery is expected to take a decade—partly because the utility is trying to function around an epic US$9-billion debt.
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“Now, the island’s legislature sees an opportunity to rethink and rebuild how Puerto Rico generates and distributes power,” the industry newsletter reports. “The bill under consideration would do away with the vertically-integrated utility model and create ‘a robust, accessible, and efficient system’ for companies to bid resources into,” according to its sponsor, Senate Vice President Larry Seilhamer Rodríguez.
Utility Dive says the plan for an all-renewable grid is based on a report by Queremos Sol/We Want the Sun, a group of Puerto Rican and mainland U.S. energy groups that focused their recommendations on solar-plus-storage, energy efficiency, demand-side management, and integration of distributed resources. “The groups estimate providing 75% of homes in Puerto Rico with a 1.5-kilowatt solar backup and a battery storage system of 5.4 kWh by 2035 would cost between $300 and $360 million per year, including labour.” But rooftop solar “reduces the need for large investments in transmission infrastructure and avoids transmission losses,” the report concludes. “It also reduces maintenance costs of the transmission and distribution network and minimizes impacts on natural resources.”
While the groups saw a possible need for some investment in gas-fired generation, they warned that Puerto Rico’s current emphasis on big, new gas plants “creates the risk of overbuilding the centralized generation system and saddling Puerto Rico in the long term with more natural gas than it needs, thus crowding out renewable energy.”
IEEFA Energy Analyst Cathy Kunkel sees a lot to like in the senate bill, including a renewable portfolio standard set at 50% in 2040 and 100% in 2050, programming to support a 30% energy efficiency target for 2040, a streamlined interconnection process for rooftop solar, and a 2028 phaseout for the island’s only coal plant.
But “in the details—where it counts—Puerto Rico will be marching forward with another generation of fossil fuel projects,” she concludes. “The bill continues to support investment in fossil fuels by mandating that all oil-fired power plants that are not retired in the next five years be converted to dual-fuel capacity (meaning that they could also run on natural gas), and that any new fossil fuel plants also be dual-fuel. In practice, this would mean bringing natural gas not just to the San Juan plant (which PREPA is already planning to do), but potentially to multiple other sites around the island,” despite a “grand vision” that supports renewables.
“The bill also does little to amend the privatization law passed and signed by [Governor Ricardo] Rosselló earlier this summer,” Kunkel writes. “That law established a privatization process in which PREPA would sell off its power plants, enter into long-term contracts to buy power, and lease its transmission and distribution systems to a private concessionaire,” with its independent regulator, the Energy Bureau, mostly left out of the process.
Ultimately, she says the bill sets up a process in which “the short-term push for natural gas and politically-driven contracts will come into conflict with the longer-term goals for renewable energy and energy efficiency.” Instead, “Rosselló’s privatization model should be scrapped and replaced with a commitment to professional energy planning that prioritizes renewable energy, particularly distributed resources.”