Friday, March 31, 2023

Puerto Rico gov enacts energy policy law banning coal by 2028

By on April 11, 2019

For sole use of renewables, distributed grid design

SAN JUAN – Gov. Ricardo Rosselló Nevares signed Thursday the law that will establish the public energy policy of Puerto Rico and which requires the progressive elimination of fossil fuels as a source of power generation.

The new law, which establishes as a mere “aspiration” that energy rates be less than 20 cents per kilowatt-hour (kWh), comes weeks before a permanent basic rate becomes effective May 1. The Puerto Rico Electric Power Authority (Prepa) has not said the amount of the new rate that will replace the provisional one implemented in 2016 and that led to a 1.29 cents per kWh higher utility bill.

In response to a question about the guarantees that there will not a hike, Rosselló said 60% of Prepa’s current expenditures go toward expensive fossil fuels, adding that the use of natural gas, which less expensive than diesel, in combination with renewable sources of energy, should provide relief to consumers.

Regarding the wording of the law that establishes the 20-cent rate as a goal, Rossellóo said he did not want to restrain the market at a time when Prepa is about to be privatized.

“We wanted to be open to the market,” he said.

The new law establishes a timeline for the implementation of renewable energy on the island: the elimination of 20% of the fossil fuel use by 2022; 40 percent by 2025; and 60 percent by 2040. By 2050, the island should be using only renewable energy sources.

“We have designed a regulatory framework to transform our energy system to a resilient, reliable and robust one with fair and reasonable rates for all consumers,” Rosselló said.

The governor added that “this new measure, together with the law for the transformation of the Electric Power Authority, provides us with the necessary tools to reform the way we view energy production and consumption. We are taking an advanced step to improve the quality of life for all who reside in Puerto Rico.”

U.S. Rep. Rob Bishop, who has received more than half a million dollars in donations from the fossil fuel industry, recently expressed doubts that Puerto Rico could achieve its renewable goals because the island’s energy grid is not prepared to accept renewable sources and would need $2 billion to modify the system.

“That’s his opinion,” the governor said.

The island’s Financial Oversight and Management Board welcomed the new energy law, saying it “establishes a fair regulatory framework and is a step forward towards the transformation of the Puerto Rico Electric Power Authority.”

The federally established panel added in its satement that “it ensures and strengthens the role of an independent regulator and lays the ground for the diversification of fuel sources and the transition to clean energy. More importantly, this new policy will give way to a more resilient and reliable energy system for the benefit of the people of Puerto Rico.”

The new law provides for the modernization of the energy grid to develop an intelligent and flexible system that can integrate new technology and renewable energy.

It orders Prepa to transfer its power generation assets through their sale or public-private partnerships. It also points out that no company can own more than 50 percent of those assets.

The contractors that acquire or operate Prepa’s powerplants must modernize or replace them with efficient plants within five years.

Likewise, the new plants that are established during the transition to 100 percent renewable energy will have to be smaller-scale plants.

They must also have the capacity to operate with multiple fuels that minimize greenhouse gas emissions, with more modern technology and higher efficiency, and with the capacity to integrate distributed generation and renewable electric power.

The law also establishes the transfer of the operation and maintenance of the transmission and distribution (T&D) of energy to a concessionaire through a public-private partnership by Dec. 31.

Asked how he plans to guarantee reasonable rates under the proposed privatization model, Rosselló said contracts under the public-private partnerships would be monitored.

Prepa CEO José Ortiz Vázquez said that “the low cost of solar energy and battery systems will make the implementation of this law possible, providing many options to consumers and making the energy grid more resilient.”

He stressed the need for resources and specialists for the new energy model and predicted a boom in the creation of jobs in the energy sector.

Majority New Progressive Party Sen. Larry Seilhamer Rodríguez said the law sets Puerto Rico on the right path, placing consumers closer to small-scale power generation, in which the largest suppliers are the consumers themselves, the energy cooperatives, municipal consortiums and microgrids, among others.

“Puerto Rico is now at the forefront with other jurisdictions in the world that are moving to produce 100 percent electricity with renewable energy sources,” the senator said.

Ortiz, like Rosselló, anticipated that contracts with energy providers Ecoeléctrica and AES will be renegotiated for these to use renewable sources before the expiration of their contracts. Ortiz said AES will be asked to use biomass instead of coal to generate energy.

“I would like to make the transition now. There is no reason to wait until 2028,” the governor said.

House Economic Development and Energy Committee Chairman Víctor Parés Otero said “this law is going to establish the correct guidelines so that Puerto Rico has a reliable, modern and resilient energy system that serves as a vehicle for sustainable economic development.”

He added that, “more importantly, it establishes safeguards so that the privatization process is transparent and benefits the consumer. I thank the governor for leading the way so that the island can transition to 100 percent renewable energy.”

The executive director of the Fiscal Agency and Financial Advisory Authority of Puerto Rico (Aafaf by its Spanish acronym), Christian Sobrino, stressed that the approved measure, Senate Bill 1121, “sends a strong message to the investment markets and the international energy industry. The message is that in Puerto Rico there is consensus, will and determination to transform our energy system to a resilient and advanced one.”

The new law promotes the distribution of renewable energy by establishing retail net-metering for participants of the Net Measurement Program, under which customers with eligible renewable energy generation systems can export their excess energy to Prepa’s network.

The utility will measure the energy that customers export to the network and invoice for the net energy consumed. Net energy is equal to the energy consumed by the customer minus the energy exported to the grid.

The law also strengthens the Puerto Rico Energy Bureau as the regulatory entity in charge of executing the implementation of the public energy policy.

The bureau’s budget will be increased to $20 million. It will be granted greater operational autonomy and will be given new powers to regulate through mechanisms based on performance metrics. The measure also creates a Green Energy Trust that will promote that consumers become consumers-suppliers.

If a customer exports more energy than they consume from Prepa, the excess will be posted to their account so it can be used in subsequent months.

Through the Net Measurement Program, the network operator will compensate the consumer-provider for the energy that they export to the network at the same rate per kWh at which they purchase the energy.

The trust will be in charge of establishing programs or financial support projects that provide access to green energy to residents of low- and middle-income communities.

The entity will also support municipal energy companies, as well as solar communities, micro-grids in isolated communities as well as those in low- and medium-income areas; it will facilitate the financing of green energy projects in micro, small and midsize businesses.

The new law also mandates the replacement of all street lighting with LEDs by 2030; and it also guarantees that no Prepa employee would lose their job as a result of this bill.

In addition, the measure will facilitate the development of large-scale renewable energy projects by incorporating the expedited permitting process under Act 76 of 2000.

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