I
remember after Hurricane Maria hit Puerto Rico and Tesla, Sunrun and other
solar companies were heading down to power the grid with solar panels and Tesla
batteries. They focused on powering up vital services like hospitals and water
systems. Despite their confidence, the success was limited. They did well at
providing quick restoration of power. There were issues with circuitry and grid
integration, but the microgrid model mostly worked. However, the solar and
battery systems that remained were not properly maintained, and many became
dysfunctional.
“We see it with off-grid systems all around the world,
where well-intentioned organizations will install systems, get a lot of PR, get
funding upfront, then they leave, and there’s a disconnect between the PR and
the reality on the ground.”
They failed to budget for project management systems and
people to ensure O&M.
The hurricane severely damaged the island’s power grid.
Power was out for months. I found an article from 18 months after the hurricane
that describes the efforts to that time. The great renewables plus battery
microgrid future envisioned was not coming to pass at all, and indeed has not
to this day. The Island passed a clean energy bill in March 2019, calling for
100% clean energy by 2050. The pathway called for 20% of power from renewables
by 2022 and 40% by 2025. The reality for 2025 is just 7%.
After the devastating
hurricane, which the country has not yet fully recovered from after 7.5 years,
FEMA funds were restricted to pay for repairing existing systems when the real
need was to rebuild the power grid anew. This is of course,e due to the
inadequacy of the Puerto Rico Electric Power Authority (PREPA), which was a
monopoly at the time. The distribution grid was largely destroyed by the
hurricane. Power was privatized to provide incentives for grid improvement. PREPA
was already deep in debt and entered bankruptcy in 2015. Allegations of
corruption, including Trump’s rage against mismanagement of relief funds, also
plagued the power authority. The power grid was already aging faster than it
could be repaired. According to Wikipedia:
“In June 2020 governor Wanda Vázquez Garced and the
AEE/PREPA signed a contract with LUMA Energy that would give the company
control of the AEE/PREPA electric grid for 15 years.”
Blackouts are common on the
Island, and the one that started yesterday during a power-hungry Easter
weekend, where many tourists are visiting the island of 3.2 million people and
1.4 million power clients. Many hotels are filled to capacity. At one point,
the entire island was without power. Lack of investment and lack of maintenance
are the main issues with Puerto Rico’s power system. The last big blackout was
on New Year’s Eve about 3.5 months ago. According to a spokesperson from Genera
PR, a major power generator, inadequate frequency regulation caused the outage.
“Daniel Hernández, vice president of operations at
Genera PR, said at a news conference that a disturbance hit the transmission
system shortly after noon on Wednesday, during a time when the grid is
vulnerable because there are not many machines regulating frequency at that
hour.”
In March 2019, PREPA awarded
New Fortress a $1.5 billion contract to convert two units at the San Juan power
station to run on gas as well as fuel oil, to supply the new units with fuel.
This was through a floating storage unit, basically a ship that receives and
transfers LNG. Replacing fuel oil with LNG is a win for cost and the
environment. However, there were issues with the deal as the San Juan harbor
was close to being inadequate for the large tankers delivering LNG, and there
were regulatory and permitting issues with FERC that New Fortress failed to
address correctly. Dredging of the harbor now allows the ships to traverse
safely. According to a quite biased against LNG Huff Post article from October
2024:
“New Fortress built two new gas-fired power stations.
This past March {2024}, the company sold the plants to PREPA, which has
received billions of dollars from the Federal Emergency Management
Administration, for nearly $400 million. That same month, the company received
another deal to supply more gas to Puerto Rico. Selling PREPA the power
stations, New Fortress said in an investor presentation, “ensures installed
power remains part of Puerto Rico’s infrastructure” and “more than doubles” the
company’s “gas supply opportunity on the island.”
LNG should be considered to
be one of the best solutions for decreasing power generation costs, especially
if U.S. LNG can be delivered. This includes converting fuel oil units to
natural gas and building new natural gas plants. However, there has long been a
stumbling block – The 1920s Jones Act.
How an Outdated Protectionist Rule Cheated Puerto Rico
While 24% of Puerto Rico’s
grid runs on natural gas, they have been unable to buy gas from the U.S. due to
a 1922 protectionist rule called the Jones Act that requires fuel to be
delivered by ships with American crews. According to Cato Institute’s Colin
Grabow in a March 2025 article:
“The problem for Puerto Rico (as well as New England,
and possibly Alaska and Hawaii too) is that none of the world’s more than 600
LNG tankers comply with the protectionist shipping law. As a result, LNG cannot
be transported by water from US export terminals to those parts of the US that
consume natural gas.”
“Until now.”
“Last week, shipping firm Crowley announced that a
French-built LNG tanker it recently purchased will begin supplying American
natural gas to the US territory. Named American Energy, it is allowed to
operate thanks to a Jones Act loophole that permits foreign-built tankers to
transport LNG to Puerto Rico (sorry, New England) provided they are
American-flagged, crewed, owned, and—this is a big one—constructed before the
measure was passed in October 1996.”
“In 2019, the Puerto Rico Electric Power Authority’s
(PREPA) CEO told Congress that the inability to source LNG from the US mainland
meant hundreds of millions of dollars in lost savings (an amount later
clarified at $300 million annually). This helps explain why Puerto Rico’s
government in late 2018 requested a ten-year waiver of the Jones Act
(ultimately denied) for LNG shipments.”
“With US LNG off-limits, Puerto Rico has been forced to
obtain the fuel in recent years from more distant sources such as Spain, Oman,
Norway, and Nigeria.”
This situation has been ridiculous and unfair to Puerto
Rico since the U.S. began exporting LNG in 2015. The French-built tanker is not
an ideal solution either, since it is an older tanker that is steam-powered,
but it is better than nothing. Many, including me, have called for an end to
the outdated Jones Act, or at least Section 37 of it, which requires ship and
crew restrictions. As shown below from a 2013 analysis, most of PREPA’s costs
were fuel costs. That is where they could save $300 million per year and apply
some or much of that capital to much-needed grid maintenance and upgrades. Even
with the loophole, the situation is still ridiculous as the French vessel costs
four times as much to operate as a modern LNG tanker.
“Puerto Rico deserves to be served by efficient, modern
vessels instead of a costly one that, in more normal circumstances, would be a
prime candidate for scrapping.”
Surely that tanker also increases emissions significantly
compared to modern LNG-powered tankers. The fact that the island is primarily
powered by diesel and heavy fuel oil (62%) and coal (8%) means that there is
plenty of opportunity to replace some or much of that with cheaper, cleaner,
lower carbon LNG that should be delivered from the nearby U.S.
The outdated Jones Act should be scrapped along with the
outdated tanker that found a loophole in it.
References:
Jones
Act Loophole Allows Puerto Rico to Finally Access American Natural Gas. Colin
Grabow. Cato Institute. March 25, 2025. Jones
Act Loophole Allows Puerto Rico to Finally Access American Natural Gas | Cato
at Liberty Blog
Island-wide
blackout hits Puerto Rico as residents prepare for Easter weekend. AP. April 16,
2025. Island-wide
blackout hits Puerto Rico as residents prepare for Easter weekend
On
Puerto Rico’s 'Forgotten Island,' Tesla's Busted Solar Panels Tell A Cautionary
Tale. Alexander C. Kaufman. Huff Post. May 11, 2019. On
Puerto Rico’s 'Forgotten Island,' Tesla's Busted Solar Panels Tell A Cautionary
Tale | HuffPost Impact
Puerto
Rico Territory Energy Profile. Energy Information Administration. Puerto
Rico Profile
'A
national disgrace': 1.4 million left without power in Puerto Rico blackout. ABC
News. April 16, 2025. 'A
national disgrace': 1.4 million left without power in Puerto Rico blackout
Puerto
Rico Electric Power Authority. Wikipedia. Puerto
Rico Electric Power Authority - Wikipedia
The
LNG Facility In Puerto Rico That Could Become A Full-On Nightmare. Gas
disasters are the rise, and an import terminal in densely populated San Juan is
operating without federal permits. Alexander C. Kaufman and Hermes Ayala Guzmán.
Huff Post. October 21, 2024. LNG
In Puerto Rico Could Turn Into A Disaster | HuffPost Impact
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