Puerto Rico has suffered a range of challenges to the health and well-being of its citizens for decades, while simultaneously having unfulfilled potential including natural resources, a beautiful land and culture, and access to northern hemisphere markets. Over the years, there have also been several initiatives that have provided glimmers of hope for Puerto Rico’s economic future and well-being, although policies have been uneven in their application and not comprehensively part of a robust economic development plan.
Hurricane Maria devastated the people off Puerto Rico, destroying lives, homes, businesses, infrastructure, the environment and the economy. Perhaps as many of 400,000 people of left Puerto Rico since Maria, 50,000 hoes remain without power, food, water, energy, social services and health care were severely impacted. The economy has been severely impacted. Maria also illuminated the severe and long ongoing under-investments in the power sector, slowing restoration with lack of replacement parts, equipment and personnel.
Puerto Rico also has extraordinary level of debt for both the protectorate and associated with PREPA. Finally, governance and the Puerto Rico’s relationship with the United States from a governance ad political perspective are not aligned to encourage a robust future for the people of Puerto Rico.
Puerto Rico also has a power grid which supplies power at an average rate of 22.3 cents per kilowatt-hour. Puerto Rico’s power grid is structured in the form of a legacy utility, with centralized power plants distributing power along transmission and distribution lines across very rough and unforgiving terrain. The power system in Puerto Rico relies upon and is beholden to captive external sources of energy, which is expensive and requires generating capital that leaves the country.
The economic dependency is further illustrated by looking at PREPA’s expenses, which hamstring’s the country’s electric utility rates and economic progress and potential. In fiscal year 2003, fuel and purchased power accounted for 75% of PREPA’s operating budget.
The challenges faced by the people of Puerto Rico require setting a course not only rebuild the economy and infrastructure of Puerto Rico, but to define a pathway and approach that rebuilds the infrastructure and builds a sustainable economic future for the people of Puerto Rico. There are also important considerations in any plan going forward that encompasses building a diverse, inclusive and growing economy that builds wealth and well-being for the people across the island of Puerto Rico. Puerto Rico has to build an economic foundation that is widely shared across the island.
The development of renewable indigenous energy sources accomplishes several important objectives. First, the cost of renewable energy is low and competitive with fossil fuel sources at scale. Second, the use of indigenous supplies of energy reduces the need for exporting capital on a permanent basis. Third, the building out of distributed renewable energy sources increases the resilience of the Puerto Rican power system. Fourth, building out renewable energy systems creates many needed jobs and generates ongoing value for land-holders and municipalities across Puerto Rico. Fifth, renewable energy agreements can include a transfer of renewable energy assets to the citizens of Puerto Rico throughout Puerto Rico.
Once the capital cost of renewable energy is paid off, the marginal cost of the energy is extremely low, covering for maintenance, land use fees, and any taxes that might be required. This means that renewable energy offers the potential for Puerto Rico to allocate a portion of the renewable energy produced to be available at low rates for business and commercial purposes. The objective is to entice low cost energy for business purposes in order to attract, retain and grow new commercial opportunities for Puerto Rico and to expand job and employment opportunities and to grow the economy, premised on clean locally produced energy.
The plan for revitalizing Puerto Rico includes:
- Deploy $40 billion of solar, wind, energy storage and other distributed renewable energy resources across Puerto Rico over five years to meet 80% of the island’s energy requirements
- Hire and train 50,000 solar installers to build out, operate and maintain these systems
- Deploy a grid-within-a-grid resilience design for Puerto Rico’s grid
- Locate distributed energy resources on a fully distributed basis as close to customers as possible
- Allow for (1) direct customer connections, (2) Community solar/wind with virtual net metering and (3) microgrids
- Provide very low electric rates to commercial and industrial enterprises that retain or expand employment
- Over time, and on a regular schedule, transfer ownership of the distributed energy assets from third party investors, developers and owners to the citizens of Puerto Rico
- Eliminate electricity subsidies currently provided to municipalities
- Put in place an asset utilization fee mechanism that recognizes and pays for the value provided by the regulated transmission and distribution lines
- Fully engage each region and municipality in forging and implementing the plan for reinvigorating Puerto Rico
- Locate equipment manufacturing facilities in Puerto Rico for solar, wind and energy storage equipment to generate additional employment and export opportunities for Puerto Rico
- Integrate renewable energy, storage and microgrid plan with with a multidimensional plan to reinvigorate Puerto Rico's economy, including inclusive economic growth and participation, strengthening schools, improving access to health care, increase job training and apprenticeship programs, focus economic growth across the territory, including expanding locally owned businesses, agriculture and commercial fishing.
- Remove barriers to expanding export businesses in Puerto Rico, and introduce advantageous tax, shipping and trade policies.