AES Enters Retail Renewable Energy Market
Markets Innovate in Photovoltaic, Battery Storage Technology
SAN JUAN — As Applied Energy Systems (AES) leaves behind coal-fired generation and embraces renewable energy and battery power as the best bet for future growth in an emerging electricity market, the multinational power company is embarking on retail sales of renewable systems and power technology to businesses as well as utilities.
AES currently sells electricity generated by its 511-megawatt (MW) coal-fired power plant and 24-MW solar photovoltaic power park in Guayama to the Puerto Rico Electric Power Authority (Prepa). The company plans to decommission the coal-fired units and replace them entirely with solar-powered plants by Dec. 31, 2027, the deadline set by the Puerto Rico Energy Public Policy Act of 2019, or Act 17, to eliminate coal-generated electricity on the island.
Bernerd Da Santos, executive vice president and chief operating officer of AES, said the company is still in talks with Prepa to “determine the solutions that are adequate for the Puerto Rico market.” Half of the energy multinational’s renewables portfolio of 10,000 MW consists of photovoltaic cells, while the other half is wind-generated power.
The AES executive said the company has “the energy solutions” to accelerate the exit of coal and build up renewable systems ahead of schedule.
“We have the intention of transforming our energy production from coal to renewables before the 2027 deadline. If we reach an agreement today, we could do it in two years,” Da Santos said in an interview with Caribbean Business. He acknowledged that the company had not presented any detailed plans for such a development to Prepa.
Plans call for the 80-year-old public utility to be broken up into GridCo, which will handle transmission and distribution and be run in a public-private partnership (P3) deal by U.S.-Canadian consortium LUMA Energy starting in June, and GenCo, with will manage the power plants, for which a P3 bidding process was begun last year to hire an operator for these facilities.
The AES executive said the company is negotiating with Prepa, which concluded the cogeneration contract with the company in the late 1990s, the executive said, noting that no agreements have been reached with LUMA Energy, which according to the P3 contract with Prepa will be in charge of purchasing power from private generators.
Since 2016, the company has reduced its global coal footprint from 18,000 MW to 7,500 MW, Da Santos said, noting that the Arlington, Virginia-based multinational achieved the second-highest amount of decommissioned coal-fired megawatts in the United States and the highest in terms of its capacity. The company-operated plants in 14 countries produce a total of more than 30,300 MW, which includes 12,000 MW of natural gas-powered units, or about 40 percent of generation, while renewables constitute 33 percent, a proportion that will continue rising, he said.
“Today we have become the biggest developer of renewables in the world. In 2019 and 2020 we signed up more than 3,500 MW in renewables each year. We continue with this goal, adding at least 3,500 MW in 2021,” the energy executive said. “We had the goal of cutting coal-energy production to below 30 percent in 2025 and we achieved this in 2020. We fixed another goal of bringing that down to less than 10 percent by 2025, and zero coal-fired generation by 2030. We plan to lower power generation emissions to zero by 2040.”
AES sees natural gas as a transition fuel to renewables, Da Santos said, adding that the multinational is also a leader in battery storage of energy, with more than 2,400 MW in operation or contracted.
“That is why I talk about a responsible and organized transition. It is about substituting with reliability and cost. We have done that in decommissioning more than 10,500 MW of coal-fired energy in Mexico, Central and South America, and the Caribbean,” he said.
In line with its strategic move toward renewables, AES is leveraging a new subsidiary, 5B, to tap into a $613 billion global retail solar energy market. The Australia-based subsidiary, acquired last year, will sell innovative renewable energy products to businesses as well as utilities, including its signature product, the Maverick solar panel system. The system, consisting of solar panels that are linked together in the form of an accordion, takes up half the space of a traditional photovoltaic park while generating the same amount of energy, Da Santos said.
“A traditional solar plant requires 10,000 square meters, but these solar panels require half of that area. These panels can be easily moved. They come together in a container and can be folded out and installed,” the executive explained. “They generate power in a third of the time that other solar panels do. What a solar power plant produces in power in a year, these solar panels do it in four months.
Da Santos said the company does not build the technology but only “integrates it to offer power generation solutions.”
“That is very important in Puerto Rico because this is an island and land is scarce. If in a space a solar plant produces 100 MW, I can produce 200 MW with this product. And this can be built in a third of the time,” the executive said, stressing that AES will install a Maverick system at the Salvation Army office in Guayama, as a donation. “We are relaunching the company brand name. We have more than 40 years of global experience developing, operating and innovating energy solutions in a safe, reliable way. Our new brand launches an ambitious strategy to reduce coal-based energy production.”
AES is also marketing to businesses its 24/7 Clean Energy system, which consists of a solar-powered plant with an integrated battery storage system that provides uninterrupted renewable energy. The product is based on its award-winning 28-MW solar plant and 100-megawatt hour battery system on the Hawaiian island of Kaua’i, which covers 11 percent of the island’s energy needs.
“We were the first in the world to build a solar generator park with batteries that provide energy 24 hours a day, seven days a week,” Da Santos said, stressing that the 24-7 Clean Energy system can operate with wind as well as solar energy. While such a system has not been installed in Puerto Rico, the company is building these types of plants stateside, he said.
Jesús Bolinaga, president of AES Puerto Rico, said the company has presented these products to several local business groups, such as the Puerto Rico Manufacturers Association. The company has set up a sales team at the Chardón Tower in Hato Rey to market its products.
“We are also in contact with several pharmaceutical companies to study the viability at each one of the sites. The reception has been positive. This is about putting our clients at the center, offering solutions tailored to each candidate,” he said.
Moreover, anticipating the establishment of a smart grid system on the island similar to those in several states, AES plans to locally market its Energía Plus digital system, which monitors business and home electricity consumption, and helps customers save in energy use.
“You can see on a screen the energy consumption of appliances and equipment connected to energy use. It tells you the hours of most energy consumption, which are the equipment consuming the most energy, so that you may organize your schedule during the day to make the most efficient use of energy,” the AES executive explained.
Power utilities in states such as Virginia, Indiana and Ohio have set up a pricing system based on the time of day the energy is consumed, and the Energía Plus product is tailored to such systems, said Da Santos, who resides in Virginia. He said that such supply-and-demand-based systems encourage businesses and residents to consume energy during hours of lower demand, “making generation a lot more efficient.”
“I have an electric car and I plug it in between midnight and 5 a.m. In those hours, I have nothing connected at home; it is the most efficient time for the grid and for me,” he explained. “In the early morning hours, when there is the least consumption and when I am plugged, I pay a lower price charging my car than at 6 p.m., when everyone is connected. Electricity prices rise during the peak hours, when stores are still open and people are returning from work,” he explained.
“We could bring this solution to Puerto Rico in the future. Puerto Rico would have to make regulatory changes for this system,” he said.