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Puerto Rico faces energy crisis amid stalled modernization efforts

The analysis is presented with a website with FAQs on the energy sector.

Puerto Rico is confronting a severe energy crisis as efforts to rebuild and modernize the island’s electric power system falter, according to a recent analysis by the Center for a New Economy (CNE).

The think tank has identified significant challenges in several ongoing energy projects, including grid stabilization, privatization of power operations and the transition to renewable energy.

CNE’s Policy Director Sergio M. Marxuach emphasized that despite substantial investments in rebuilding Puerto Rico’s energy infrastructure over the last seven years, progress has slowed dramatically. The island recently experienced rolling blackouts during one of the hottest summers on record, underscoring the fragility of the power grid.

The CNE’s policy brief highlights several complex, multibillion-dollar projects aimed at stabilizing and upgrading the grid, which are hampered by poor coordination and execution. Various companies and government agencies are leading these initiatives, but accountability is lacking and decision-making processes remain unclear.

“During the summer of 2024, most of these efforts to transform the system appear to have been derailed, as the island was hit by rolling blackouts in the middle of one of the hottest summers in recent memory. Indeed, progress has slowed down almost to a standstill in some areas, and perhaps more worrisome, the government appears to be unable to discern a way to get out of the current quagmire,” said Marxuach.

The report details several concerns, including potential increases in electricity costs if the Puerto Rico Electric Power Authority debt is not restructured. It also scrutinizes the agreements with LUMA Energy and Genera PR, the private companies managing the island’s power transmission, distribution and generation assets. Despite promises of savings and improvements, these agreements have yet to deliver their anticipated benefits.

Key concerns for the future include delays in transitioning to 100% renewable energy, increased reliance on fossil fuels and rising electricity rates. The policy brief warns that if current trends continue, Puerto Rico’s energy rates could exceed 35 cents per kilowatt-hour (kWh) by 2027-2028, leaving the island far short of its goal of 100% renewable energy by 2050.

Marxuach reiterated CNE’s commitment to advocating for a resilient, affordable and sustainable energy system. He stressed that immediate action is necessary to address the island’s energy crisis and prevent further setbacks.

“CNE advocated strongly for Act 17 of 2019, and we believe in the goals set by this law. Puerto Rico needs an electricity system based on renewable energy that is both reliable and affordable. But as the country moves toward this transition, CNE will continue to monitor, analyze, make recommendations, and advocate for an affordable, resilient and sustainable electricity system for Puerto Rico,” said Marxuach.

For more details, the CNE has launched a website with frequently asked questions regarding Puerto Rico’s energy sector.

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