Puerto Rico‘s Springboard Opportunity for Grid-Resilience

17 Oct 2017

Weeks after Hurricane Maria hit Puerto Rico with 155 mile-per-hour winds, destroying crops, flooding cities, and damaging major infrastructure, many of its 3.4 million residents are still without necessities. The federal government has been slow to respond, and now companies are seeking opportunities to help citizens and ensure Puerto Rico’s grid is resilient against future natural disasters. Puerto Rico has a leapfrog opportunity to build a grid of the future, but only with new strategies from all parties including the utility, the federal and local governments, and the public.

Clearing the Way: A New PREPA Strategy

Investment in Puerto Rico’s energy infrastructure has been limited primarily by the financial instability of the Puerto Rico Electric Power Authority (PREPA). PREPA, responsible for all electricity generation, transmission and distribution in Puerto Rico, is a government monopoly. In 2016, only 2% of Puerto Rico’s electricity came from renewable energy, with the remainder coming from petroleum (47%), natural gas (34%), and coal (17%). The island does not produce conventional fossil fuels, relying heavily on imports to meet electricity demand, adding to its financial woes. When PREPA could not pay for its fuel purchases in 2014, it took $100 million out of its Capital Improvements Fund to pay down its debt instead of improving grid infrastructure.

PREPA does not have sufficient funds to repay obligations, nor does it have certainty in collecting the $1.5 billion in receivables owed. Since 2014, Puerto Rico has reformed and regulated its electricity industry, but customers still see high monthly electric bills. Puerto Ricans pay an average of 22.7 cents/kWh for electricity, the third highest in the US behind Hawaii and Guam. However, the percentage of income that Puerto Ricans must set aside to pay electricity bills is over twice as much as Guam or Hawaii. In addition to fees PREPA levies on customers to pay for many inactive and antiquated power plants, about a third of electric accounts receive subsidized electric bills, placing the burden for payments primarily on the working class. Unsurprisingly, this leads to a high percentage of Puerto Ricans defaulting on electricity bill payments.

PREPA filed for bankruptcy in July 2017 after struggling with $9 billion of debt, and now it faces millions of dollars more in repairs from Hurricane Maria. Now is the time for PREPA to create strategies to overcome financial weaknesses. At a minimum, this means cutting costs from expensive oil imports through increasing distributed renewable generation, fundamentally altering Puerto Rico’s approach to electricity.

Taking the Leap: A Significant Increase to Renewable Goals

The federal government is approving Puerto Rico’s aid package, which will give the island funds it needs to rebuild its energy infrastructure. This package could also spark needed investment in new energy sources that was previously lacking from PREPA’s poor credit. Though gaining federal government support for renewables will be difficult, this is a perfect opportunity for Puerto Rico to become energy independent and build a resilient grid focused on distributed generation and microgrids. While US states look to slowly transition to renewable energy over the coming decades, Puerto Rico has the chance to go all in as they start from scratch.

Microgrids with solar plus storage technology can be created around emergency services such as hospitals, nursing homes, and fire stations, allowing essential services to continue running even when there is an unexpected grid outage. Tesla is already sending hundreds of Powerwall batteries to Puerto Rico which can be paired with solar panels for this exact purpose.

New grid transmission and distribution lines need to be built, transferring power from utility-scale renewable generating sources such as offshore wind and utility-scale solar farms to populated cities and towns. The new utility lines being built ideally would have plenty of capacity to support projected consumption for years into the future, as well as distributed generation projects coming online as cities are rebuilt.

The local government can support the effort by increasing Puerto Rico’s renewable energy goals.  In 2010, Puerto Rico established a meager 20% renewable portfolio standard (RPS) for electricity generation by 2035, and already missed its target to achieve 12% renewable generation by 2015. As a comparison, Hawaii, which consumes over 10% renewable energy currently, has approved a Power Supply Improvement Plan that outlines how the State will hit 100% renewables by 2040, five years ahead of its initial 2045 target. Though Puerto Rico has a net metering policy, storage requirements, and mandates for solar hot water heaters, new policies should be set to address rebuilding after the hurricane. The local government should set high sustainability requirements for all new construction, requiring solar panels or some form of distributed generation on new buildings, and allowing installation of only energy efficient appliances and lighting.

Landing Securely on the Other Side: Engage the Public

Proactive public support for a new approach to electricity is essential, and will only come with education. People need to be aware of risks and benefits associated with any large infrastructure project, and understand how projects will be financed.  They need to fully understand electricity alternatives available to them beyond burning imported oil at old and expensive generating plants.  They need to demand a reform in electricity rates so that everyone is billed for energy use, and so they stop paying for inactive power plants. Lastly, they need to advocate for energy independence so their financial wherewithal is not dependent on oil prices.

Time is of the essence. Puerto Ricans need electricity now. There isn’t time for a multi-year permitting process typically required for large generation projects. Leadership must create and implement a fast track process now to incorporate distributed solar and wind plus storage into daily life as the island is rebuilt. Affordable, clean distributed generation and utility-scale resources are available now, and should play a vital role in Puerto Rico’s electricity strategy.


Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered 650MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Print Page


Stephanie Sienkowski

Stephanie Sienkowski