IEEFA Puerto Rico: Input Is Being Sought Now on How to Strengthen Electricity System and Spur New Investment

November 13, 2017

Cathy Kunkel

This is an important week in the recovery of Puerto Rico, where more than half the population of 3.5 million is still without electricity almost two months after Hurricane Maria.

As part of its investigation into how the Puerto Rico Electric Power Authority (PREPA) has responded to Hurricane Maria, the Puerto Rico Energy Commission has published a request for comment on best practices in microgrid and distributed generation development, which combined embody real long-term hope for electricity independence and resilience on the island.

The deadline for comments is Nov. 20, seven days from now.

Microgrids, which, as the name implies, are small generation and distribution systems, would be able to operate separately from PREPA’s main grid. Distributed generation would be exemplified by applications like rooftop solar and “cogeneration,” or combined heat and power (CHP) systems that can be used for industrial purposes.

In the long aftermath of Hurricane Maria, solar energy companies are showing how fast-evolving solar and storage technologies present Puerto Rico with an opportunity to rebuild its grid in a way that would be far more resilient than the current model. Puerto Rico historically has relied on centralized fossil-fuel generation from oil and coal plants that are located mostly on the southern coast of the island and that require long-distance transmission lines to reach population centers in the north.

Microgrids would help the larger system withstand the very transmission-line failure that left the island so crippled after Maria.

BUT PUERTO RICO LACKS A CLEAR LEGAL STRUCTURE for how to build microgrids. Who can develop and own them? How much can they charge for the electricity they produce? What technical and financial qualifications should be required of developers?

The commission is seeking input on questions like these, and is in search of guidance as well on whether and how microgrid development should be prioritized geographically.

The potential for change is promising. The solar energy industry has responded already with concrete solutions, and the commonwealth can do much to advance those solutions with regulatory processes that are investor friendly.

The commission is also soliciting specific input on whether existing PREPA regulations should be modified to encourage the faster development of residential and commercial rooftop solar.

We agree with this approach, which allows for a re-envisioning of Puerto Rico’s outdated and mismanaged electrical system and a re-imagining of market and governance structures that can support transition.

In its request for comment, the commission is acknowledging the role microgrids and distributed solar can play both in immediate power restoration and in long-term grid resiliency. It is also acknowledging the importance of regulatory frameworks that will support such modernization.

This strategy makes far more sense than the one being hinted at in a rush by some Puerto Rico officials to “privatize” PREPA, a move that would blindly turn the system over to outside moneyed interests. Privatization advocates are both unclear about what problems such a move would address exactly and how privatization would solve them.

Cathy Kunkel is an IEEFA energy analyst.

PDF: Puerto Rico Energy Commission request for comment

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