Sunday, January 26, 2020

IEEFA update: Evaluating Puerto Rico’s energy transformation, an opportunity to define and promote the public interest

By on December 10, 2019

PREPA is trying to solve 21st-century problems with 20th-century solutions

Puerto Rico is in the process of overhauling its electrical power system: evaluating its integrated resource plan (IRP), approving wheeling regulations, acquiring a concessionaire for transmission and distribution, and setting up private management of power generation plants, among other measures that will affect the island’s electrical system for years to come.

UNFORTUNATELY, A SCATTERSHOT APPROACH IS BEING TAKEN to address the complexities of restructuring the energy sector. It has become a battle of ideologies, private vs. public ownership, fighting over which side offers more promising performance. The policy proposals have become driven by ideological preferences rather than concrete action plans.

The travails of the Puerto Rico Electric Power Authority (PREPA), like PG&E in California, have demonstrated that it is not the type of ownership, private vs. public, that can bankrupt a utility. Rather, it is a lack of accountability and protection of the public interest.

I had the privilege of serving from 2014 until 2018 as Associate Commissioner and later, as Chair of the Puerto Rico Energy Commission, now called the PR Energy Bureau (PREB). During my tenure, when asked by a reporter if Puerto Rico could be held up as a model for the rest of the world, my answer was that it would be more appropriate to consider us “a model of what not to do” if we continued along the same course. That course has not changed.

A MULTITUDE OF STAKEHOLDERS AND CRITICS HAVE POINTED OUT THE MANY FLAWS contained in the IRP.

However, there is one major flaw from which all others emanate. Namely, there is a lack of definition of what constitutes the public interest. The relevant statute states that any changes must serve and protect the public interest. However, it does not define what the public interest is. The PREB has not defined it either. As a result of this lack of clarity, PREPA has framed the path forward through the lens of its own perceived advantage – promoting natural gas over renewable energy.

It is important to point out that PREPA’s interests are not the same as the public interest, the Authority should be considered a private/special interest even though it is a publicly‑owned utility.

Why is framing so important? It is imperative that frames are understood in order to not become trapped by them. As linguist George Lakoff explains, “frames … shape the goals we seek, the plans we make, the way we act, and what counts as a good or bad outcome of our actions.” Once a frame is set, it may be accepted as the norm by others.

PREPA HAS CONTROLLED THE FRAMING OF THE IRP by repeatedly using phrases and terms such as: “hybrid decentralized system,” “customer-centric,” “wind energy production occurs simultaneously with solar photovoltaic (PV),” “offshore wind will take too much time to study and develop,” “electric vehicles are not practical in PR,” “we have evaluated multiple scenarios,” and “PV and storage will not produce power as quickly as a mobile gas unit after an event like Hurricane Maria,” just to name a few recurring messages.

However, if asked to define what a decentralized system is, the answer would not be anything resembling what PREPA is proposing. PREPA’s version is a system with big centralized natural gas plants, and a transmission and distribution grid divided into eight regions that PREPA calls “mini-grids.” A truly decentralized system would rely instead on small generators, in this case solar generators, dispersed throughout Puerto Rico.  Simply calling a system “decentralized” does not make it so.

PREPA HAS ALSO PROPOSED THE MINI-GRIDS AS BOOSTING “RESILIENCY” but for critical loads only (loads related to safety and health). There is no mention of the fact that after the devastation of Hurricane Maria, most, if not all, the critical loads on the Island now have some form of back-up power, either solar with storage or a backup generator.  So, it is unclear what additional value these new “mini-grids” would bring.

PREPA also claims it has received anecdotal evidence of solar systems failing during the hurricane. Such statements frame solar as incapable of providing resiliency. In reality, it ignores the fact that, before Hurricane Maria, solar systems were installed primarily for bill reduction purposes (net metering) with technologies that only work when the electric grid is up and running. The framing ignores that current installations can have energy storage and the appropriate technology for off-grid operation.

DURING ITS EVALUATION PROCESS, PREPA CLAIMS TO HAVE EXAMINED MULTIPLE SCENARIOS. It is true that PREPA looked at several variables, however, in reality, the ones tested can be boiled down to just two options: the status quo and adding natural gas-fired central plants. The “variety” of scenarios merely changed the locations for situating the central gas plants.

Renewable energy has been severely short-changed during the evaluation process. Fundamentally, a system driven by renewable energy was never seriously taken under consideration. It is only viewed as a supplement to natural gas. Second, only utility-scale solar is evaluated. Individual and business investments in solar panels were brushed off and offshore wind was completely ignored. In addition, the potential for introducing electric vehicles was evaluated by only one “expert” who concluded EVs would not take off in PR.

PREPA has been able to frame and dominate the narrative of the energy transformation. Although not unique to PR, such framing happens in many other places, but it is extremely alarming and dispiriting when, as nations move increasingly toward renewable energy, opting for 21st century solutions, PR’s answer is a 20th century centralized fossil fuel-based system. Wouldn’t it be in the public interest to attempt a different framing?

* José H. Román Morales is an IEEFA consultant, expert in Puerto Rico’s energy transition.

Related items:

Puerto Rico update: Queremos Sol coalition calls for adopting decentralized and renewables-based energy plan
IEEFA Letter to Puerto Rico’s Legislative Assembly: Secure more viable PREPA debt deal
IEEFA update: Governor Vázquez needs to scrutinize new natural gas contracts in Puerto Rico

–The views expressed in the Opinion section are the writer’s own and not necessarily those of Caribbean Business.

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