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With high electricity rates and room aplenty in its renewable portfolio standard (RPS), the U.S. commonwealth of Puerto Rico seems like an ideal locale to build wind projects.

In 2010, Puerto Rico passed Act 82, a law meant to promote energy diversification, including an RPS that requires the Puerto Rico Electric Power Authority (PREPA) to obtain 20% of its electricity from renewable sources by 2035. At the time of the law’s passage, nearly 70% of electric power generated on the Island was derived from oil with the remainder coming from coal and natural gas. Currently, the RPS stands at 1.5% penetration.

According to the U.S. Energy Information Administration, about 1% of Puerto Rico’s electricity comes from renewable energy sources, primarily from hydropower. More than 400 MW of solar photovaltaics (PV) and 250 MW of wind are in development.

Raoul Slavin, managing director at Aspenall, an independent power producer based in Dorado, P.R., says the Puerto Rican wind market certainly has potential.

“In Puerto Rico, wind energy is a no-brainer,” he says. “The cost of retail energy makes it very possible to have a competitive [wind] project.”

He says high electricity rates – upwards of $0.26/kWh – make renewables and wind energy cost competitive.

According to the Puerto Rico Renewable Energy Producers Association, PREPA has signed power purchase agreements for 63 private projects, including 46 solar, 11 wind and six waste-to-energy.

The projects offer energy at a weighted average of $0.144/kWh. Some contracts also call for the sale of renewable energy credits at $0.028/kWh.

Early on, some smaller solar PV and behind-the-meter wind projects began appearing on the Island. Slowly, some utility-scale wind projects have started to dot the landscape.

For example, Pattern Energy’s Finca de Viento Santa Isabel – Puerto Rico’s first utility-scale project – came online in 2012, as did Gestamp’s Punta Lima, a 23 MW wind farm featuring 13 Vestas V100-1.8 MW wind turbines.

However, the movement to build and interconnect those early wind projects forced government agencies, such as PREPA and the Department of Agriculture, to address some hard questions.

For example, how could the Island support wind farm build-out without sacrificing the land used for farming? How could wind energy safely and reliably interconnect with Puerto Rico’s aging grid?

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Agricultural sensitivity

Although manufacturing, tourism and banking are predominant industries, Island officials have long prioritized maintaining Puerto Rico’s agricultural heritage. The prime farming locations are near the coastal zones in the southern part of the Island, which coincidentally, are also the best sites for wind farms.

“The areas best suited for wind energy are located along the coastal zones, which also happen to be the best areas for farming,” explains Julian Herencia, executive director at the Puerto Rico Renewable Energy Producers Association.

Although Puerto Rico’s wind resource tops out at a modest 6.5 m/s and the region features capacity factors in the 20% to 25% range, wind developers maintain the Island has enough quality attributes to host successful wind projects.

In Puerto Rico, the Department of Agriculture must endorse all wind projects; otherwise, the Oficina de Gerencia de Permisos will not issue a permit. And due to its willingness to sign long-term deals at low rates, local wind developers also work with the Puerto Rico Land Authority (PRLA), a government entity as well as the Island’s major landowner.

Unlike in the mainland U.S., where the landowner is the recipient of the project royalties during project operation, the PRLA is the recipient of the lease. In turn, farmers and ranchers in Puerto Rico typically lease the land from the PRLA.

The arrival of Pattern’s Santa Isabel wind farm, however, put Puerto Rico’s zeal to host wind turbines to the test. Some opposing the wind farm believed the project would occupy too much space and leave little for farming.

Additionally, as the project was being built, some local farmers said they were unaware of Pattern’s plans to build a wind farm. One local farmer says he had no idea construction was about to begin until the trucks began arriving on his property.

Later, opponents demonstrated against the wind farm, and the subsequent arrests made local headlines. Gradually, the controversy began to cast a long shadow over wind development in general.

By 2013, the Popular Democratic Party came into power, and the sentiment toward wind energy changed. Shortly after taking office, Secretary of the Department of Agriculture Myrna Comas Pagan stated that the department would no longer allow the building of renewable energy projects on agricultural lands.

 

One of those projects on hold is Aspenall’s 10 MW wind project located in the southern region. Despite landowner agreement and turbines that occupy just 1% of the land, Slavin says the project has been put on hold for agricultural concerns.

Aspenall, which owns and operates two 250 kW wind turbines on the site of a Bacardi bottling plant, is a long-time developer of wind projects on the Island. Slavin says he has noticed a marked difference in attitudes toward wind energy since the building of Santa Isabel.

“The Pattern project led to a lot of controversy,” Slavin comments. “There were protests and arrests that made for bad public relations. It is very bad for the industry.”

For its part, Pattern Energy maintains it went above and beyond what was required by law.

According to Collie Powell, Pattern Energy’s senior developer in Puerto Rico, the developer reimbursed 18 of the 21 lessee farming establishments a total of approximately $1.3 million.

“In all instances, we tried to mitigate the impacts felt by the farmers,” Powell explains. “We asked them, and then we incorporated their feedback.”

“The project requested multiple meetings with protestors to evaluate their concerns and demands, but the protestors displayed no interest in such a meeting,” Powell notes, adding that none of the protestors was a farmer who had land on the project site.

And that farmer who claims he was unaware of a wind project? Not true, Powell says.

“In terms of public outreach,” Powell says, “farmers were notified about the project approximately one year before construction activities began.” (For more information about Pattern’s Finca de Viento Santa Isabel, see “Pattern Primes Puerto Rico For Utility-Scale Wind”.)

 

Grid requirements

The other mitigating factor in Puerto Rico is the grid, which is operated by PREPA.

Puerto Rico has an Island grid, meaning the transmission and/or distribution is not physically connected to any other grid. Therefore, there are no backup measures to keep the electrical system operating reliably should a calamity occur.

PREPA maintains that its grid is extremely fragile and integrating large amounts of renewable energy would compromise reliability. As such, the agency has been slow to integrate renewables. In fact, there are only four grid-connected renewable energy projects on the Island, including Pattern’s Santa Isabel and Gestamp’s Punta Lima.

The Puerto Rico Renewable Energy Producers Association made efforts to work with PREPA to incorporate and finalize the minimum technical requirements, including ramp rate control and frequency regulation.

According to the IEEE, a ramp event refers to drastic shifts – either up or down – in the speed of wind in a given location over a short period of time. Ramping can dramatically affect the grid’s power levels. Frequency regulation provides for system protection during such events.

“A lot of PREPA’s hesitancy stems from fear of the unknown,” Herencia explains. “We are just beginning to integrate renewable energy. Going forward, we want to be sure the grid does not suffer reliability [issues] from adding renewables.”

While Herencia’s fledgling renewable energy association scored a big victory for wind producers, education about renewable energy needs to continue.

And there are additional signs of a changing attitude toward wind and renewables.

In January of this year, lawmakers introduced Joint Resolution 625, a bill that would drastically alter PREPA’s operations. Among other actions, the legislation seeks to limit PREPA’s monopoly, open up the grid to more renewables and create a regulatory body, such as a public utility commission, to hold PREPA accountable.

Suddenly, Herencia says, “The environment looks a bit more optimistic than it did several months ago.” w

Spotlight: Puerto Rico

Emerging Market Beckons, Albeit With Caveats

By Mark Del Franco

Could Puerto Rico provide an opportunity for wind developers seeking to expand beyond the continental U.S.?

 

 

 

 

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