After Hurricane Maria decimated Puerto Rico in 2017, the island endured the largest blackout in U.S. history, with the last home’s electricity finally restored after 11 months of darkness.
Knowing more resilient and renewable power could help avoid future blackouts, the island’s legislators passed a bill titled Act 17 in 2019 establishing parameters for a resilient, reliable and robust energy system with just and reasonable rates for all classes of customers. Puerto Rico committed to achieving 40% renewable energy by 2025, 60% by 2040 and 100% by 2050. To meet the 40% stairstep, the island will need to add 3,500 MW of new renewables over the next four years, according to the Solar Energy & Storage Association of Puerto Rico (SESA).
At the same time, billions of dollars in federal funding from the Federal Emergency Management Agency (FEMA), U.S. Department of Housing and Urban Development (HUD) and other entities were made available to the island to rebuild and strengthen its electrical infrastructure. The amounts sounded hopeful to achieve those legislative goals in theory, but meeting the federal criteria and making collaborative plans to allocate the funding was another story.
“There’s an unthinkable amount of theoretical money floating around that’s not really flowing but has been somehow appropriated,” said Javier Rúa-Jovet, chief regulatory, policy and government affairs officer at SESA.
Receiving government funds, especially from FEMA, comes with stipulations. At the most basic level, the administration requires Puerto Rico to file proposals for approval by the agency.
Puerto Rico’s single utility neglected to even take that first step when it was due in September 2021, according to residential solar installer Sunnova, which was present at the hearing.
“There is $12 billion available for Puerto Rico to improve their energy system and they just haven’t bothered to fill out the paperwork. There’s some level of incompetence and mismanagement too that’s part of all of this,” said Meghan Nutting, executive VP of government and regulatory affairs for Sunnova.
The Resident Commissioner of Puerto Rico, a non-voting member of the United States House of Representatives, urged the island’s utility (known as PREPA until becoming Luma Energy in May 2021) to submit the documentation as soon as possible.
Several entities have some input on the island’s electrical system. There’s the governor and state legislature, the federal government, the relatively new Puerto Rico Energy Bureau (PREB), the Fiscal Oversight Management Board for Puerto Rico and others. The difficulty is determining who’s in charge of making sure the funding goes to the right places to support Act 17 — as well as federal renewable energy goals set by the Biden Administration.
“We hope that all the money that has been appropriated or that is available for Puerto Rico not only flows at some point, but is used in ways that are compliant not only with federal statements [but also] with Puerto Rico policy,” Rúa-Jovet said.
Part of the problem is some of the lawmakers who championed Act 17 aren’t part of the legislature anymore. In the vacuum of leadership, the utility entities have attempted to push resident self-generation to the side in favor of more fossil fuels and investor gains.
“People at the federal level need to help shepherd this through and make it happen and provide guidance to Puerto Rico,” Nutting said. “There’s a lot of work to do, so we need political leadership and we also have to take advantage of the assets that we’ve got.”
Those existing assets are the tens of thousands of residential storage systems already deployed on the island that could be aggregated to form a virtual power plant.
Act 17 set in motion a new Integrated Resource Planning process requiring the utility to purchase thousands of megawatts of new renewable energy. In a historic first, PREB required the utility to include virtual power plants in the bidding, according to Rúa-Jovet.
“That’s definitely the largest untapped virtual power plant in the world just sitting there. Sunrun and the other market participants could very easily just put those batteries on a timer so they cycle at the same time every day and provide that service to the utility, but there’s no mechanism by which to do that,” said Chris Rauscher, senior director of market development and policy at Sunrun, another solar + storage installer working on the island.
It’s not yet clear if the utility will accept any of the VPP proposals.
To scale residential solar + storage installations even faster and more equitably, SESA wants the utility to use federal funding to establish solar + storage tax incentives that correspond with income levels.
“The market drives itself pretty well, but there’s some chunks of the market that need help, like lower income people might not qualify for the usual run-of-the-mill solar loan or lease because of credit scores,” Rúa-Jovet said.
Puerto Rico has the potential funding to electrify the island on a large scale using creative solutions, but coordination and compromise are needed to reach robust renewable goals.
“It’s just these huge money streams that are available out there, but you need to connect the dots and [have] people talk to each other to know what can be done,” Rúa-Jovet said.