Fiscal board greenlights solar-plus-storage additions, sets conditions for PREPA contracts.

By THE STAR STAFF

The Financial Oversight and Management Board for Puerto Rico has approved, with conditions, a set of Puerto Rico Electric Power Authority (PREPA) contracts that would add new battery storage capacity tied to existing renewable assets and support near-term reliability measures as the island faces tight generation margins.

In letters dated May 8, the oversight board’s general counsel, Jaime A. El Koury, notified PREPA that the board’s determinations were issued under its contract review policy and Section 204(b)(2) of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), which requires certain government contracts to promote market competition and remain consistent with the certified fiscal plan.

One group of approvals focuses on expanding battery energy storage through the Accelerated Storage Addition Program (ASAP), a standard-offer process designed to pair new storage with independent power producer facilities that already have permits, operating interconnection points and executed power purchase and operating agreements. Under two separate determinations, the board approved standard-offer amendments between PREPA and multiple resource providers to develop storage facilities that would discharge into the grid from existing interconnection points.

Among the projects cited, the board described a Solaner Puerto Rico One battery system expected to provide 40 megawatts (MW) of storage capability and an Xzerta-Tec Solar I project expected to provide 120 MW. In a second set of ASAP approvals, the board referenced a 71.4 MW storage facility associated with Polaris Power US, an 80 MW project tied to the Lajas Solar Project, a 125 MW project linked to CS-UR Juncos PV, and a 50 MW project associated with Infinigen Yabucoa ASAP. Each of those contracts contemplates a 20-year term from commercial operation, with options for two five-year extensions subject to review by the Puerto Rico Energy Bureau (PREB), the board said.

The storage contracts set a storage capability payment price of $16,000 per MW per month of tested storage capability with no escalation, a price that is expressly inclusive of federal investment tax credits, according to the board. If a project fails to qualify for the credits within a reasonable period after commercial operation, the payment price would rise to $20,600 per MW per month, also without escalation. Still, the board conditioned its approvals on developers making good-faith and diligent efforts to secure and maintain eligibility for the tax credits and on quarterly reporting to PREPA describing those efforts. The board also urged that design and sourcing decisions take into account “foreign entity of concern” considerations to the extent needed to preserve tax credit eligibility.

Separate May 8 determinations addressed emergency temporary generation contracts procured through PREPA’s Third-Party Procurement Office (3PPO) under RFP No. 3PPO-0314-20-TPG2, a process launched in July 2025 after the PREB directed the government to address an anticipated shortfall of roughly 700 to 850 MW. The board issued “approved with conditions” findings for two proposed 10-year contracts: one for 200 MW of temporary floating generation units at the San Juan power plant with Gothams Energy and Americas Power Solutions Holdings for a total of $2.4 billion, and another for 400 MW of temporary generation at the Aguirre power plant involving Power Expectations, Enchanted Rock and Reyes Contractor for $5.8 billion.

In both temporary generation reviews, the board said it found gaps that must be addressed before the contracts can be executed, pointing to concerns over enforceable schedules, performance guarantees and fuel-price protections. It required the government to define project milestones for permitting, interconnection and infrastructure and to require weekly reporting against those milestones, while also establishing liquidated damages and clearer termination triggers if commercial operation dates are missed. The board also required more robust payment and performance bond structures to backstop project delivery through commercial operation and during the operating period.

For the 200 MW floating project, the oversight board additionally directed PREPA to reassess the selected site, noting that Costa Sur had been identified as a potentially more viable alternative and that parties had discussed relocating the project there because of logistical and interconnection advantages. For the larger Aguirre project, the board highlighted uncertainty about how liquefied natural gas logistics would be in place before commercial operation and called for clearer allocation of costs and limits around any diesel operation requested by PREPA.

PREPA must submit updated versions of the contracts incorporating the required revisions, and the parties may not execute the agreements until the oversight board determines the conditions have been satisfied, the letters said. The board emphasized that its review is limited to PROMESA compliance and does not constitute a legal review of procurement or contracting processes.