Puerto Rico seeks new facility to meet power generation demand
The Puerto Rico Public-Private Partnerships Authority (P3A) and the Puerto Rico Electric Power Authority (Prepa) have initiated a request for qualifications (RFQ) to find companies interested in providing a new power generation facility on the island to meet current and future demand.
In its news release, the Puerto Rico government said the objective is to improve resource adequacy, given that natural disasters have disrupted power transmission capabilities and exacerbated supply-demand issues. For instance, most of the generation occurs in the southern part of the island, while the greatest demand comes from the north, requiring transmission lines to cross the island’s central mountain range, which is difficult to access for repairs after hurricanes strike.
The generation facility project will be a long-term contract between Prepa and a private partner that “will identify a suitable site location, design, permit, finance, construct, install, manage, operate and maintain the Generation Facility,” the P3A said.
The RFQ’s issuance is in response to an order by the Puerto Rico Energy Bureau (PREB) instructing Prepa to initiate a competitive procurement process for a public-private partnership (PPP) contract for the generation facility.
The P3A’s executive director, Fermín Fontanés-Gómez, said that as Puerto Rico moves “forward with the transformation and modernization” and of its energy grid, the PPP will assist in “strengthening the reliability of power generation on the island.”
Besides the energy regulator’s order back in August, the project’s objectives also align with Prepa’s integrated resource plan (IRP) to meet future energy needs and a resource adequacy study conducted by the utility’s transmission and distribution system operator, LUMA Energy. The study highlighted the need for Puerto Rico to increase its supply resources to ensure system reliability and meet anticipated demand.
Puerto Rico’s outdated power plants have a high risk of so-called load shedding outages beyond industry standards due to inadequate reliable generation capacity. The study found that the probability of existing generators failing to meet system load demand is nearly 100% over the course of a year. Additionally, Puerto Rico’s loss-of-load expectation for fiscal year 2023 is 88 times higher than the utility industry benchmark of one day in 10 years.
“This means that, for 2023, it is expected that there will be 8.81 days per year (on average) on which electricity demand will not be met by the existing generation supply,” according to the release.
With the aim of improving its aging power facilities, Puerto Rico handed over its electricity production in January to Genera PR, a subsidiary of New York’s New Fortress Energy. The initial $22.5 million annual contract includes operation and maintenance of the island’s 12 generation facilities, while a 10-year deal covers fuel purchases and related contracts. New Fortress Energy reportedly collaborates with Shell Oil and other oil and gas producers.