Energy for Puerto Rico

Energy is an issue for Puerto Rico. Electricity is about twice as expensive on the Island as in most of the States, and it’s not as reliable as people would like it to be. Only Hawaii has more expensive electricity than Puerto Rico.

This has effects on Puerto Rico’s desirability as a business location. Retailers need to keep their lights on and their point of sale systems online. Construction workers have to have the use of their power tools. Restaurants must have reliable refrigeration and working ovens.

For manufacturing, for many years the dominant industry in Puerto Rico, it’s not enough to have electricity — clean, steady electricity is essential. “Dirty” electricity, power that fluctuates, can trigger safety shutdowns in factory robots and assembly lines. That means that the entire factory can grind to a halt until the problem is sorted out.

Given a choice between building your factory in a State where electricity is clean and reliable, and building in a place with guaranteed downtime and safety concerns, what would you choose?

Rep. Jose Serrano made the issue of energy one of the central points in his recommendations to the Task Force on Economic Growth in Puerto Rico. “In order to foster economic growth,” he wrote, the federal government needs to provide technical support for Puerto Rico and the territory’s government needs to make it easier to work toward renewable energy sources. “The Department of Energy should develop an energy action plan for Puerto Rico—as mandated by the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235)—that includes recommendations on reducing the island’s dependence on fossil fuels, utilizing U.S. fuel energy sources, and improving the island’s energy infrastructure and overall energy efficiency.”

According to the U.S. Energy Information Administration, Puerto Rico currently gets more than half of its electricity from petroleum, nearly a third from natural gas, 16% from coal, and only 2% from renewable energy. Puerto Rico is well suited to solar energy and is home to the largest wind farm in the Caribbean, so it isn’t lack of natural resources that cause the problems with energy.

A recent Energy and Finance Report claims that the passage of PROMESA has revived renewable energy deals that have been languishing on the back burner. “The foundations of most of the projects on the island were power purchase agreements (PPAs) with PREPA,” the article points out, and PREPA, the territory’s electricity utility, has been a big part of the debt crisis in Puerto Rico. Investors have been nervous. PROMESA has encouraged investors to look again at the possibilities.

If the Task Force takes energy issues seriously, Puerto Rico could end up with more affordable energy bills for the residents and a more appealing business climate for industry.

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