Puerto Rico Regulators Want IRP To Include More Renewables, VPPs, and Mini Grids

Puerto Rico’s utility system was virtually wiped out after Hurricane Maria devastated the island three years ago. Some utility customers were without electricity for almost a year. The reasons for the disaster that befell Puerto Rico Electric Power Authority, the island’s utility company, were themselves a perfect storm of greed, corruption, and ignorance. Mismanagement by the US government and Congress has been a hallmark of America’s relationship with Puerto Rico almost since the time of the Spanish American war.

Structurally, the island’s utility system prior to the arrival of Maria involved large generating plants in the lightly populated southern part of the island supplying electricity to the more heavily populated northern part via transmission lines that crossed the rugged mountainous region in the middle. Maria destroyed those transmission lines, leaving much of the island without power for long periods of time.

Puerto Rico, with is abundant sunshine and ocean breezes is, like many islands, a perfect candidate for renewable energy supplied by local mini grids. The distribution system that existed prior to Maria was frankly a terrible idea based on century old thinking. Of course, it was conceived and constructed at a time when renewables didn’t exist but now the question is whether to rebuild the island’s utility system the way it was or the way it should be.

PREPA recently submitted its latest Integrated Resource Plan, which envisions 8 mini grids on the island — that’s good — powered by gas fired generating stations — that’s bad. The plan also includes a large LNG terminal. But officials at the Financial Oversight and Management Board for Puerto Rico and the U.S. Federal Emergency Management Agency have indicated they prefer more renewables, more virtual power plants, more distributed resources, and more battery storage instead of a reliance on natural gas, according to a report by Utility Dive.

Roy Torbert of the Rocky Mountain Institute says, “PREPA argued to shut down older fuel plants and replace then with new natural gas. PREB said it wanted to first seek renewables.” RMI has worked with the Institute for Competitiveness and Sustainable Economy for Puerto Rico to help develop a vision for reforming the island’s energy system.

The path forward recommended by PREB calls for the procurement of 3,500 MW to 3,900 MW of new solar and 1,360 MW to 1,480 MWh of grid scale battery storage by 2025. The range is there to reflect that the pace of improving energy efficiency may vary, says Torbert. There will be some natural gas peaker plants involved but not the massive commitment to gas proposed by PREPA. About $2 billion in improvements to the transmission system is also contemplated.

Efran Paredes, interim CEO of PREPA, issued a statement saying the utility is “evaluating the document and our options to determine the next step.” The final resolution from PREB is more than 300 pages long. PREB will hold a separate hearing on the mini grid idea and says it wants to see PREPA do more analysis on distributed resource potential.

“The regulator said it was a powerful concept and wanted to know more,” Torbert says. “It’s an interesting way to think about resilience. In this instance, the regulator did what it’s really supposed to and protected customer interests. The regulator has found that when done properly renewables can be resilient.” Getting the IRP finalized might have taken longer than some liked hes says but “the result is worth it.”

The decision by the regulators calls for more study of PREPA’s plan to create 8 mini grids on the island but does direct the utility to move forward with a localized grid for the San Juan/Bayamon area — Puerto Rico’s most populous region. It is also where most of the island’s commercial and industrial activity is located.

Agustín Carbó of the Environmental Defense Fund says PREPA’s proposal to rely heavily on fossil fuels “was not a good idea.” Under the proposal from regulators, in 5 years 40% of the island’s electricity will be from renewables. Today, it is just 2%. He worries that the bureaucratic process will slow down the island’s transition to renewables. PREPA could appeal the PREB ruling, which would further delay the island’s recovery from the ravages of Maria. “It will take more than six months to get through the RFP procedure. It needs to happen soon.”