June 7, 2019

Puerto Rico utility asks for another resource plan extension

By Eva Lloréns Vélez, Caribbean Business

SAN JUAN — After the head of the Puerto Rico Electric Power Authority (Prepa), José Ortiz, said he would submit the utility’s integrated resource plan to the Energy Bureau (PREB) by May 31, he has requested an extension until Friday.

On Wednesday, the regulator granted Prepa’s request as well as to provide updated testimony in support of the IRP filing by June 14. However, PREB warned the utility that any further delays would result in $25,000-a-day fines.

The 20-year IRP is to transform the island’s energy production, and presents several strategies and scenarios for long-term supply. Prepa sent the document to the Energy Bureau in February, but the regulator gave the utility 30 days to revise it after identifying numerous deficiencies, but granted several extensions for the updated plan.

PREB Assistant Commissioner Lillian Mateo Santos said that after the bureau evaluates the document, it will be put through hearings before making a final determination.

The regulator had ordered Prepa to justify certain “fixed decisions” and explain the need for preselected natural gas resources and limitations on solar power and storage. This year, the government enacted a law that would require the island to generate all of its power needs from renewable energy sources.

Along with proposing solar and storage projects, the IRP, which was developed by Siemens, the German engineering conglomerate, also recommends a variety of natural-gas infrastructure, compromising the island’s legislated public policy to only use renewables by 2050.

The resource plan proposes to divide the island into eight mini-grid regions for a distributed system that can operate independently in the event of a disaster. It also calls for smaller microgrids in geographical areas that make repairs difficult.

The original IRP supported two scenarios for the provision of energy. The first is a generation portfolio, identified as Scenario 4 Strategy 2 (S4S2), which meets the criteria for least cost, resiliency and viability in terms of installation of solar energy storage and distribution. It calls for the option of developing ship-supplied liquefied natural gas (LNG) terminals at Yabucoa on the east coast and Mayagüez on the west coast.

The scenario also includes an LNG terminal in San Juan, which could obtain permitting approval. The scenario assumes solar and storage costs and availability based on reference-case assumptions.

However, the IRP also proposes a scenario called Energy System Modernization (ESM), which according to Prepa, is based on several generation expansions.

“The purpose of the ESM Plan is to expedite the implementation of a preferred plan, utilizing procurement options presented by the Public-Private Partnerships Authority, identify the pricing structure necessary to retain existing natural gas-fired generation in the south, consider location alternatives for new large-scale [combined-cycle gas turbines] and ensure reliable capacity in the San Juan area,” the IRP reads.

The ESM is based on “fixed decisions” that include the building of a natural gas import terminal and gas plant in Yabucoa, a new land-based natural gas import terminal and gas plant in the San Juan area, a ship-based natural gas import terminal and conversion to natural gas of existing units in Mayagüez, and a new powerplant in San Juan. The economic simulation of the ESM case results in 900 megawatts of utility-scale photovoltaic additions over the plan’s first four years.

The bureau sought clarification from Prepa as to why it created a scenario containing the so-called fixed decisions for projects.