November 13, 2017 Read More →

‘Lots of Talk, Little Action’ on Puerto Rico Transition

E&E News:

The shape of Puerto Rico’s future grid is confused, because no one yet has the authority to dictate what the future grid will look like.

PREPA, the island utility, is conducting repairs, but it has few resources and is distrusted by officials in Washington. After Hurricane Maria hit, PREPA forsook aid from other American power companies and hired Whitefish Energy Holdings LLC, a tiny contractor, to rebuild major parts of its transmission system for $300 million. Controversy around that contract caused its cancellation two weeks ago.

Ramos, PREPA’s CEO, was a no-show at a U.S. House Natural Resources Committee hearing meant to scrutinize the Whitefish contract and recovery efforts.

Another option to steer Puerto Rico’s future grid is the island’s financial oversight board, FOMB, which was established last year by the Obama administration to control the purse strings of the Puerto Rican territorial government as it restructures $72 billion in debts.

FOMB has proposed making one of its key officials, Noel Zamot, into a “transformation officer” who would sit atop PREPA to guide its investments. At the House hearing, Zamot said his vision for Puerto Rico was “50 percent renewables by 2040, with the balance a natural/LP gas mix; regional grids with generation close to demand; physical hardening and control schemes to provide resiliency; and widespread distributed generation, all wrapped by an empowered, accountable energy regulator.”

He said that he will have a draft of “a wholesale reimagining of the grid” by mid-December.

If successful, Zamot’s appointment suggests that mainland utilities and various federal agencies would have influential roles in reshaping the territory’s grid. Zamot said he has already been meeting with FEMA and the Department of Energy and that he is hearing from the Edison Electric Institute, an association of investor-owned power companies, and the American Public Power Association, which represents municipal utilities.

DOE is researching opportunities to install microgrids in PREPA’s network to make facilities more storm-resilient, according to Carl Imhoff, the director of electric infrastructure markets at the Pacific Northwest National Laboratory, which is one of DOE’s national labs, in testimony before the Senate Energy and Natural Resources Committee.

DOE is also working out where vulnerable substations should be relocated to deal with flooding risk, and potential locations for backup batteries to maintain water service in blackouts.

Funding from FEMA could cover three-quarters of the costs of storm-hardening changes in the island’s grid that get federal approval.

Judge Laura Taylor Swain, a federal judge in New York who is overseeing Puerto Rico’s receivership, will hold a hearing today on Zamot’s role.

Still, other options for reimagining the grid could come through the Puerto Rico Energy Commission, which was established three years ago as the first body to ever oversee PREPA. Earlier this year, it prompted PREPA to submit its first-ever integrated resource plan, which describes where a utility intends to obtain its power and how it intends to pay for it. PREPA suggested replacing its ancient oil-powered generators with natural gas turbines and supplying these new power plants from a floating gas terminal off the island’s south coast. The energy commission agreed with the idea in principle but rejected PREPA’s plan for lacking crucial details.

The commission, in a legal brief to Swain, said it would cooperate with FOMB but defended its role as the last word on Puerto Rico’s grid.Meanwhile, other entities are seeking to influence the outcome.

The Institute for Energy Economics and Financial Analysis, a think tank based in Cleveland, wants Puerto Rico to seek private investment in distributed energy resources, including combined heat-and-power plants, microgrids and renewable energy to power key centers like hospitals, universities and large employers. It advocates for slashing PREPA’s budget and for replacing the utility’s one-size-fits-all electricity rates with a two-tier structure: 15 cents per kilowatt-hour for industry and 21 cents per kWh for individual consumers.

The Rocky Mountain Institute in Colorado has been promoting its microgrid projects on other Caribbean islands.

“We are working with partners to design a new 21st-century, hurricane-resistant system” for Puerto Rico, said Chris Burgess, a director of projects at the Rocky Mountain Institute. That grid would have buried distribution lines; rely on distributed solar power and batteries; and support hospitals, shelters, and police and fire stations with microgrids. He added that the principal argument is that renewable power is more cost-effective than fuel oil and less subject to violent price swings. “Fuel is the No. 1 cost to the electricity customers,” he said.

Berger, the head of Sunnova, said he is shopping around a proposal to take the federal solar investment tax credit, which companies and residences can take advantage of to lower the cost of a solar system, and tweak it for Puerto Rico and the U.S. Virgin Islands, which was also pummeled by Hurricane Maria. Instead of a tax credit, it would for a period of time be made into a direct cash payment that would spur quicker investment in solar power.

Meanwhile, AES, the long-standing Puerto Rico energy player, has ideas of its own. It points to 20 MW of battery-based energy storage that it has deployed in the Dominican Republic, where it helped maintain grid reliability in September when Hurricanes Irma and Maria raked the island.

Praveen Kathpal, AES’s vice president of energy storage, said in an interview that the batteries provided frequency control during the storms, providing second-to-second balancing of supply and demand, and smoothed out swings in frequency as the hurricane knocked out lines.

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