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Campaign promises of ‘low-cost, reliable and clean electricity’ must be kept

The devastation caused by Hurricane María in 2017 highlighted Puerto Rico’s “antiquated, expensive and fossil fuel-dependent” electricity grid, providing the Biden administration with an historic opportunity to transform a vital part of the island’s economy.

The Institute for Energy Economics and Financial Analysis (IEEFA) recommends in a new policy brief that the administration battle entrenched interests that have served Puerto Rico poorly with four basic steps to meet its campaign promise of “low-cost, reliable and clean electricity” for the island.

It should immediately halt the use of federal funds that encourage costly and unnecessary natural gas infrastructure. The Puerto Rico Electrical Power Authority (PREPA) wants to use $850 million in federal money to build natural gas projects throughout the island, despite objections from its regulator, the Puerto Rico Energy Bureau.

“The Biden administration should push hard for the release of federal grants to be used for projects that strengthen resiliency, such as small-scale solar and battery systems that can provide power during prolonged outages,” IEEFA said in a release.

“Given Puerto Rico’s long history of contracting scandals, expenditures of more than $10 billion in federal money that have been promised to modernize its grid should be monitored closely,” it added.

In its study, IEEFA recommends the use of an independent private-sector inspector general to oversee the project, similar to the office used to supervise contracts for debris removal from the World Trade Center site after the Sept. 11, 2001, attacks.

The Biden administration needs to audit a restructuring agreement that covers $8.3 billion in legacy debt, it added.

The deal will require Puerto Rico to cover at least two-thirds of the amount owed, an unsustainable sum even before the global coronavirus pandemic and a series of earthquakes rattled the island’s economy.

“Deep reform of Puerto Rico’s antiquated, expensive and fossil fuel-dependent electrical system has been needed since long before Hurricane Maria devastated the grid,” said Cathy Kunkel, an IEEFA energy finance analyst who developed the recommendations with Tom Sanzillo, the institute’s director of financial analysis.

“A new electrical system driven by renewable energy will support the goals of reliance, affordability and fiscal stability,” they added.

PREPA announces upcoming RFP
In related news, PREPA announced it will publish a Request for Proposals for the procurement of 1,000 MW of renewable energy resource capacity and 500 MW of energy storage resource capacity, including 150 MW of capacity to be provided by virtual power plants (VPPs) made up of distributed generation, store and demand response resources. 

The RFP represents the first of six RFP tranches soliciting proposals of a cumulative total of 3,750 MW renewable energy resources and 1500 energy storage resources during a three-year period in accordance with the Integrated Resource Plan (IRP) and certain orders issued by the Puerto Rico Energy Bureau, the public corporation noted.

“Issuing the upcoming RFP is a fundamental step toward the implementation of our Integrated Resource Plan and the start of large-scale penetration of renewable energy in Puerto Rico, aimed at achieving the goal of reaching 100 percent by 2050,” said PREPA Deputy Director of Operations Fernando M. Padilla.

“PREPA views the publication of this event as a critically important step towards the transformation of Puerto electrical system,” he said.

For several months, PREPA has coordinated with the Puerto Rico Energy Bureau and the Financial Oversight Management Board to ensure compliance with the infrastructure and fiscal plans governing the development of generation and energy storage projects. 

The utility has formed a committee to administer the RFP process and appointed advisers to assist with the evaluation of proposals submitted as part of the RFP process in accordance with applicable laws and regulations.

PREPA will make the RFP document available in www.aeepr.com.

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This story was written by our staff based on a press release.

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