DOE calls for large Puerto Rico gas plant as island targets 100% renewables

Dive Brief:

The Department of Energy is recommending the installation of a large natural gas plant in Puerto Rico — a move it admits could run counter to emerging clean energy policies in the U.S. territory.
Siting 1200 MW to 1600 MW of natural gas generation in San Juan would "greatly enhance the reliability and disaster resilience of Puerto Rico's power system," DOE Assistant Secretary Bruce Walker told a House committee, but "could be at odds" with a 100% renewable energy bill recently passed by the territory’s legislature.
The CEO of the Puerto Rico Electric Power Authority (PREPA) said he would prefer a smaller San Juan gas generator, but told reporters he also supports the 100% renewable energy goal. Meeting that target by 2050 will depend on continued innovation in clean energy, he said.

Dive Insight:

Tuesday's hearing in the House Natural Resources Committee laid bare the tension over how to reshape Puerto Rico's energy future after Hurricane Maria destroyed PREPA's grid in 2017.

Last month, legislators on the island territory passed a 100% renewable energy mandate PREPA would have to hit by 2050. It awaits the likely signature from Gov. Ricardo Rosselló.

The DOE, however, said its analysis indicates the most cost effective solution to secure the island against future disasters is a large, long-lived fossil fuel asset.

"DOE believes an increase in the natural gas generation in San Juan would be one of the single most valuable investments for PREPA's long-term recovery," Walker said. "However, pursuing this investment may be at odds with the island's energy policy should the governor choose to sign the Puerto Rico Energy Public Policy Act."

San Juan constitutes about 70% of PREPA's overall load, Walker said, and siting a plant there would eliminate the reliance on a series of North-South transmission lines that deliver power from generators in the south of the island. Those lines were a key weak point during Hurricane Maria and took months to rebuild.

A large gas generator could also lower PREPA's commodity costs, Walker said, "which can be used to cost effectively get PREPA out of debt without additional funding." The publicly owned company is currently in bankruptcy as Puerto Rico lawmakers seek a private buyer for its assets.

DOE worked with island stakeholders on the plan for the gas plant, Walker said, including turbine provider Siemens and the Central Office of Recovery and Reconstruction (COR3) in Puerto Rico. DOE estimates the project would cost about $2 billion.

Some Democrats critiqued Walker's plan, saying it could lock Puerto Rico into fossil fuel infrastructure that would need to be phased out to meet the 100% plan.

"How do you reconcile your statement of LNG being the most valuable investment with the island's policy toward renewable energy?" asked New York Democratic Rep. Nydia Velázquez.

"The renewable energy portfolio as set forth today given the technology is undoable," Walker responded, later adding that "it's not technically possible today to convert that island instantaneously to 100% renewables."

Just how long Puerto Rico would utilize that natural gas plant and others remains unclear. PREPA CEO José Ortiz Vázquez called natural gas "the perfect partner" for growing renewables, but also said he supports the public policy goal of 100% by 2050.

"I think at the end of the day technology will dictate how much we will need on natural gas and how fast we can integrate renewables," he told lawmakers.

Ortiz said PREPA agrees with the need for a gas generator in San Juan, but may want the facility to be smaller than DOE envisions.

"If we go that big in size it will harm the growth of the renewables," he told reporters after the hearing.

PREPA is constructing 480 MW of natural gas generation near the defunct Palo Seco plant where DOE wants to site its plant. Ortiz said that new capacity will shave a dollar off the island's retail power rates (in per-megawatt hour terms) when it comes online in August, and could be combined with plant recommended by DOE.

"At the end of the day we can certainly consolidate to the other plant," he said. "They are close to one another."

PREPA is currently making revisions to its 20-year IRP after Puerto Rico utility regulators rejected an initial proposal last month. Ortiz said that proposal will contemplate the DOE plant, as well as ways to scale up renewables.

"We have to create a harmony between the transition and the investment in the transitional infrastructure in order to be able to move into renewables without a lot of debt from natural gas infrastructure," he said. "That's part of the IRP."