Green energy projects approved by fiscal board still leave island well off the pace for meeting goal
By The Star Staff
Although the Financial Oversight and Management Board has approved 18 proposed power purchase and operating agreements (PPOAs) that would provide 844 megawatts (MW) of electrical energy from renewable sources, Puerto Rico would still be well short of a renewable energy goal of 40% by 2026 that was established in a 2019 law.
The oversight board at a meeting last week approved the 18 contracts between the Puerto Rico Electric Power Authority (PREPA) and 15 companies, noting that it would allow Puerto Rico to generate 23% of its electricity from renewable sources by 2024, “a significant step toward achieving its goal of 100% renewable generation by 2050.”
However, Act 17 of 2019 requires that Puerto Rico draw 40% of its energy from renewable sources by 2026, 60% by 2040 and 100% by 2050.
Puerto Rico currently generates less than 4% of its electricity from renewable resources. Approximately 50% is generated using expensive and dirty fuel oils.
“While most states and developed countries progressively reduced their reliance on fossil fuels, PREPA failed to make the needed investments to modernize its fleet to be cleaner, more efficient and based on renewable resources,” the board said.
Regarding the contracts, the board said the proponents were selected based on price and technical and financial qualifications. The approved contracts are with Clean Flexible Energy LLC, CS-UR Juncos PY LLC, Convergent Coamo Energy Storage 1 LLC, Esmeralda Solar Farm LLC, Diversys Solar LLC, Go Green Usa America Corp., Pattern Barceloneta Solar LLC, Guayama Solar Energy LLC, Solaner Puerto Rico One LLC, Solarblue Bemoga LLC, YFN Yabucoa Solar LLC, Tetris Power LLC, Enerxia Solar LLC, Pattern Vega Baja Solar LLC, and Ciro Two Salinas LLC.
“This is a historic moment for Puerto Rico,” said the oversight board’s outgoing executive director, Natalie Jaresko, at a meeting last Friday, which was her last as her resignation becomes effective at the end of this week. “Puerto Rico is finally putting in place clean and affordable electricity after decades of clinging to dirty and expensive energy. Reliable and affordable energy is at the core of any economic development strategy. Moreover, the successful competitive procurement process attracted highly qualified bidders. This is substantial progress in both process and outcomes, which bodes well for PREPA’s transformation and Puerto Rico’s future.”
The delay in meeting renewable energy goals was caused in part because the oversight board had rejected PPOAs previously negotiated under the past administration of then-governor Luis Fortuño.
PREPA previously sought to launch its procurement of renewable energy projects by negotiating amendments to contracts entered many years ago with 16 renewable energy generation contractors, none of which were operational at the time of the amendments. In 2020, after extensive review, the oversight board rejected all such non-operational contracts because the projects were not the result of a competitive procurement process and the prices exceeded benchmarks in the Integrated Resource Plan (IRP) and the PREPA Certified Fiscal Plan. PREPA subsequently commenced a public bidding process for the renewable energy projects. The process resulted in a strong turnout from market participants, with over 70 bids submitted, including numerous bids from industry-recognized developers.
As a result, the approval of the proposed contracts will result in up to $387 million in savings over a period of 15 years. The contracts comply with the Certified Fiscal Plan for PREPA and promote market competition, the two criteria under which the oversight board reviews contracts. The Puerto Rico Energy Bureau (PREB) previously approved the proposed contracts.
LUMA Energy LLC, the operator of PREPA’s grid, is currently conducting interconnection and system upgrade impact studies with regard to the proposed contracts’ projects. Should those system impact studies produce a material variance in cost metrics from the estimated costs included in the proposed contracts, those contracts with material variance would have to be resubmitted to the PREB for approval.