Puerto Rico gov’t issues request for qualifications for energy partnership projects

Prepa Director José Ortiz, COR3 Director Omar Marrero and Gov. Ricardo Rosselló (Courtesy)

Involve peak-period, hydroelectric generation

SAN JUAN – Puerto Rico’s government has issued requests for qualification for two public-private partnerships (P3s) for the development, management and operation of peaking units as well as hydroelectric power plants.

The announcement was made by Gov. Ricardo Rosselló; José Ortiz, the executive director of the Puerto Rico Electric Power Authority (Prepa) and Omar Marrero, director of the Public-Private Partnerships Authority (PPPA).

Rosselló said both projects, and a third one underway that consists of the installation of battery storage systems, will allow the island to move toward the legislated objective of renewable energy generation.

“It is an ongoing PPPA effort and we expect it to have four or five [public-private partnerships] before the end of this year. The transformation of the energy model continues through the renewable path that will allow for a more resilient network,” Rosselló said.

Private firms had suggested the partnerships via unsolicited proposals.
Marrero explained that the P3 model starts with the qualification process of firms interested in becoming partners with the government and can design, operate and manage the projects.

The proposal to install mobile power generation units to address peak period is for the provision of 450 megawatts via a 25-year contract.

The government is interested in generation units that can be moved to existing powerplants when needed or to new locations in the future.

Initially, they would be installed in power complexes or facilities such as Aguirre, Costa Sur, Daguao, Jobos, Palo Seco and Vega Baja.

“It’s a long-term contract to provide that energy through a power-purchase and operating agreement. We are looking for a private entity that can offer a complete solution,” Marrero said. The units should be in place by 2020.

COR3 Director Omar Marrero, Gov. Ricardo Rosselló and Prepa Director José Ortiz (Courtesy)

The official added that “If this project had been undertaken prior to the hurricane [Maria], the response would have been more effective.”

In fact, the project was submitted as an unsolicited proposal by a consortium comprising ARG Precision Corp., PW Power Systems Inc. and Bostonia Partners LLC on June 15, 2017.

“One of the characteristics we are looking for is for each unit to be able to run both diesel and natural gas,” Marrero said.

The second partnership was described by Marrero as “cool and sexy” for its resilience, or “black start.” It involves the design, management and operation of 16 generation units and turbines at nine hydroelectric plants. The project also entails the management of federal disaster funds, which are also managed by Marrero, as also director of the Central Office for Recovery, Reconstruction & Resiliency (COR3).

The idea was initially submitted as an unsolicited proposal by Cube Hydro Partners LLC and CSA Architects & Engineers LLP on May 25, 2017.

The project to manage and operate Toro Negro hydroelectric plants 1 and 2 was left out because several mayors want to operate them as a consortium.

This project would materialize as a long-term rental agreement for facilities or a long-term operation and maintenance contract.

Ortiz said these projects lay the foundations to reach 100% use of renewable sources to provide electricity service. The transformation of the electrical system would consist of eight “macro grids” composed of mini-grids in which peaking units could be transported where needed to stabilize the system.

Prepa Director José Ortiz (Courtesy)

Ortiz said that if Prepa were to invest in peaking units, it would have to pay about $17 million for each. In this case, a private entity would be responsible for making the investment, which would be paid back through a lease of the facilities or a power-purchase operation contract.

When the current peaking units are lit, the cost of energy is 34 cents per kilowatt-hour (kWh) because they operate using older technology and costlier diesel, thus Prepa is seeking new peaking units that can produce energy at a lower cost and operate with natural gas or diesel.

The contract for the hydroelectric plants entails modernizing current facilities including the installing of new turbines. The cost of the energy produced by these plants is about 7 cents per kWh.

Ortiz could not say how much it would cost to renovate the hydroelectric plants, but made clear these are “in very bad condition,” especially their penstocks, or channels from mountain lakes.

The Puerto Rico Aqueduct and Sewer Authority (Prasa), which owns some hydroelectric plants, has expressed objections to expanding Prepa’s use of hydroelectric power, citing its own energy needs as well as water conservation.

Although in its fiscal plan Prasa seeks to obtain the title of other hydroelectric plants to produce its own power, Ortiz said Prepa first has to conclude its bankruptcy-like process to be able to make decisions regarding its generation assets.

Prasa hopes that with the energy savings obtained from producing its own energy with the hydroelectric plants, lakes can be dredged to increase water reserves. There is a priority project, however, to dredge lakes using federal funds.

The most recent integrated resource plan (IRP) submitted by Prepa to the Energy Bureau is still under evaluation. However, Ortiz said the newest proposals submitted had been considered under the modified IRP approved several years ago.

“We are all consulting this with the Bureau,” he said.

Puerto Rico Senate-passed bill would transfer hydroelectric plant operation to town

SAN JUAN – The Puerto Rico municipality of Villalba and three other mountainside towns could achieve energy self-sufficiency via renewable sources within two years.

This, after Senate Bill 477, which transfers the Toro Negro Hydroelectric Power Plant to the Villalba municipal government, was unanimously passed. The measure was authored by the chamber’s president, Thomas Rivera Schatz.

Mayor Luis Javier Hernández Ortiz had been fighting all government branches to achieve this initiative since the beginning of 2013, when he was elected.

“Doing justice to the mountain [towns] was needed and expand its economic development. There is no doubt this area was left behind after Hurricane Maria. We were left without [electric] power for six months, and it arrived in Orocovis in May,” the mayor told Caribbean Business.

The initiative had the support of main Puerto Rico agencies such as the Aqueduct and Sewer Authority and the Electric Power Authority, as well as that of Gov. Ricardo Rosselló, Resident Commissioner Jenniffer González, Senate President Thomas Rivera Shatz, the fiscal board Revitalization Coordinator Noel Zamot, and Senate and House lawmakers.

The bill now goes to the lower chamber for consideration and then to the governor for enactment. Villalba’s mayor would then, along with his counterparts from Orocovis, Morovis and Ciales, begin the process of building a microgrid in nearly 300 acres of his town that will combine the energy generated by the hydroelectric plant with solar panels.

The mayor said the project would be financed with U.S. Housing Department Community Development Block Grant (CDBG) program funds, of which $ 2 billion has been obliged for energy projects. Hernández Ortiz said he could not yet give an estimate of the project’s costs, but that the solar panels could require a $30 million investment.

The hydroelectric plant, on the other hand, needs significant pipeline repairs. The bodies of water must also be dredged, the mayor said, when describing the state of the facility. The Consorcio Energético de la Montaña, or Mountainside Energy Consortium, will be advised by the University of Puerto Rico’s microgrid research laboratory.

When asked about electric service customers’ transfer to hydroelectric power, Hernández Ortiz said he will have to wait for legislation to regulate the transmission and distribution because the legislature’s energy policy bill only addresses energy production.

“Our goal is to achieve resilience, that if there were a natural disaster, we can have energy quickly, that we have renewable energy sources and that it be low-cost,” he said.

Puerto Rico Senate passes public energy policy bill

Puerto Rico energy regulator declares Carraízo Dam project ineligible for fast-track permitting

Photos by USGS, Caribbean-Florida Water Science Center Hydrologic Technicians – San Juan (Screen capture of https://waterdata.usgs.gov)

SAN JUAN – The Puerto Rico Energy Commission (PREC) has declared the proposed Carraízo Dam Hydroelectric Generation Rehabilitation project ineligible to be classified as a “critical energy project” and thus will not be put through an expedited permitting process.

The proposed project was seen as crucial to help reduce energy costs for the Puerto Rico Aqueduct and Sewer Authority (Prasa) and help jumpstart the rehabilitation of other dams to poduce power.

PREC made its decision in a recent letter to Noel Zamot, the Puerto Rico fiscal oversight board’s revitalization coordinator, who is in charge of moving along critical infrastructure.

The proposed Carraízo Dam project includes the installation of three turbines with a generating capacity of 8 megawatts (MW) at the end of the existing dam to generate power from discharge water.

PREC said there were deficiencies in the information it was provided, which limited the regulator’s ability to determine that the project would connect to the Puerto Rico Electric Power Authority’s (Prepa) system or whether it would have an adverse effect on the utility’s integrated resource plan, which PREC had modified.

Federal law establishes that PREC’s evaluation is required for energy projects that will connect to Prepa’s transmission or distribution facilities.

“The Carraizo Dam proposal does not specify if it will interconnect to PREPA’s grid or if the energy produced by the system will be consumed entirely on-site without any need for it to be transmitted through PREPA’s grid. On this subject, the application and supporting documentation provide contradicting information,” PREC wrote.

The application states as one of the benefits of the proposed projects that it will “produce electric energy at very low costs” that will “help considerably in lowering” the cost of electric power for Prasa.

However, PREC said the proposed power purchase agreement between the water utility and Steamflow Technology Corp. states that the contractor will “[a]ssist and/or represent PRASA in negotiations for the formalization of the Electric Power Selling Agreement with the Local Electric Utility,” Prepa.

“Similarly, it is unclear whether Prasa’s facilities will consume the total energy output generated by the project or if excess energy output will be injected to Prepa’s grid,” PREC stressed.

The total projected capacity of the proposed project (7 MW – 8MW) suggests that not all the energy produced by the system will be consumed on-site and would require infrastructure to inject excess energy output to Prepa.

“Certainty regarding the project’s impact on PREPA’s grid, including whether the project interconnects to PREPA’s grid, is a necessary component of the Commission’s evaluation of a proposed critical project under Section 503 of PROMESA [Puerto Rico Oversight, Management, and Economic Stability Act]. A project that does not interconnect to Prepa’s grid, and therefore will operate separately and independently from Prepa’s system is not subject to the commission’s evaluation,” PREC concluded.

First ‘critical project’ designation sought from Puerto Rico fiscal board