Puerto Rico is contracting for more power than it needs, IEEFA warns

Central Aguirre power station in Salinas. Puerto Rico is on track to dramatically overbuild its power generation system, according to a new analysis by the Institute for Energy Economics and Financial Analysis.

By THE STAR STAFF

Puerto Rico is on track to dramatically overbuild its power generation system, according to a new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA). The group says the island is contracting for far more capacity than necessary -- despite a legal mandate to reach 100% renewable energy by 2050.

On Oct. 17, the Puerto Rico Public-Private Partnerships Authority (P3A) issued a request for qualifications (RFQ) for 3,000 megawatts (MW) of new firm generation capacity. That same day, grid operator LUMA Energy filed its 20-year integrated resource plan (IRP) with the Puerto Rico Energy Bureau (PREB) -- a plan rendered largely irrelevant by the P3A’s move.

The IEEFA argues that this timing underscores a deeper problem: Puerto Rico’s energy decisions are increasingly made outside the integrated resource planning process, which is designed to ensure least-cost, reliable service. Instead, ad-hoc contracting is driving major investments -- such as a 560-MW natural gas plant and plans for 800 MW of temporary generation to run for a decade -- far beyond what the IRP envisioned. The current IRP only called for evaluating a single 300 MW gas plant.

If the aforementioned projects proceed, Puerto Rico will have an 85% reserve margin for years to come -- more than double industry standards -- even before accounting for planned battery storage.

“What is the purpose of a planning process if the decision has already been made to overbuild the system for the next 20 years?” the IEEFA asks.

The group warns that this approach will lock in fossil fuel dependence and higher costs for consumers. Any new gas plants built now will likely operate well past 2050, undermining Puerto Rico’s renewable energy goals. While officials have floated green hydrogen and biodiesel as future fuel alternatives, the IEEFA notes that neither is likely to be cost-effective or climate-friendly in Puerto Rico.

The IEEFA stressed that bypassing a rigorous planning process in favor of politically driven procurement repeats the mistakes that led to PREPA’s financial crisis -- and risks saddling Puerto Rico with unnecessary infrastructure and higher rates.