Having suffered for decades from natural disasters, perverse federal policies, local mismanagement and much more, the people of Puerto Rico are in need of reforms in many dimensions, prominent among them a modernized, efficient and reliable electric power system.
And that need is more-or-less immediate, as the rickety commonwealth electricity system finally is operating, however inefficiently, after hurricanes in 2017 and a powerful earthquake in 2020 inflicted weeks and months of interrupted electricity service for many thousands of Puerto Rico residents. One would think that modernization of the system as quickly as possible would be uppermost on the minds of public officials, with lower costs and greater reliability foremost among objectives.
But one would be wrong. In a classic exercise in misplaced priorities, 17 members of Congress have written to the Federal Emergency Management Agency demanding that FEMA financial support for the reconstruction of the Puerto Rico electricity system be used “to promote the installation of… renewable energy sources, including photovoltaic and battery energy storage systems and rooftop and onsite solar…”
For reasons discussed below, such a system would work poorly at a very high cost, and installation of all the needed solar panels and transmission lines and all the rest would consume 15 years or more. The commonwealth cannot wait: Modernization of the economy and achievement of renewed long-term economic growth require a modernized electricity system sooner rather than later.
The electric power system in Puerto Rico is a mess. It is old. It is antiquated. It is unreliable. It is very expensive to operate. It is structured poorly on a geographic basis in terms of its ability to serve and support the development of a modern commonwealth economy, one already beset with a shrinking work force and federal policies that impose large inefficiencies. It is too susceptible to natural disasters that are predictable. It has been poorly managed for decades.
And it is a political football, as power rates and collection practices have been used to subsidize favored constituencies. Many years of political interference, poor investment decisions and massive damage attendant upon natural disasters have yielded an obvious need substantially to rebuild the system. Commonwealth officials argue that such an undertaking is beyond the means of the rate-paying customers of the Puerto Rico Electric Power Authority (PREPA), a utility that already has an existing $9 billion debt. Accordingly, PREPA entered bankruptcy in 2017, and the existing debt has been the subject of years of debt-reduction negotiations with the creditors.
Enter FEMA. In consultation with PREPA, it has formulated a 10-Year Infrastructure Plan, the total cost of which is about $11.8 billion, of which FEMA will provide about $10.7 billion. The Plan is detailed and complex, addressing generation, transmission and distribution, substations and other infrastructure, hardening, hydro investment and other central components of a modernized power system. Of particular interest is the list of generation investments, comprising “black start” assets (needed to provide power so that large parts of the system can be restarted in the case of a large-scale outage), combined-cycle gas generating units, “peaking” units needed to satisfy peak demands, synchronization equipment and the like.
Because the Plan is a serious document that recognizes engineering realities, it barely mentions renewable power, with only a passing reference to “Renewable Energy and Battery Storage Projects — Phase 1,” for which the cost estimate is “TBD” and with no schedule for beginning analytic work or submission of planning documentation to FEMA. The PREPA and FEMA experts understand that wind and, in the context of the congressional letter to FEMA, solar power are inconsistent with those objectives.
Large investments in a system heavily weighted toward renewables would create massive new problems. Notwithstanding ubiquitous assertions to the contrary, wind and solar power are not competitive with modern conventional generation. (It is no accident that power prices in California are the fifth highest in the lower 48 states.) Wind and solar power are unreliable precisely because air flows and sunlight are intermittent; “capacity factors” (roughly, the percent of the time that a given power type can be expected actually to generate electricity) are far lower for wind and solar units than for natural gas. And the generators in an alternating-current system must be synchronized at 60 hertz. Because fuel (e.g., natural gas) supplies are reliable, conventional units can do that by changing the torque on the generators. Wind and solar units cannot because air flows and sunlight cannot be scheduled. Without such synchronization, more blackouts will ensue.
Alas, for some public officials such realities are optional. Their priority is climate politics, and the predictable adverse effects on service reliability are not their problem. Total commonwealth generation capacity in 2018 was 6000 MW, with power production of 18 million mWh.
Let us ignore the capacity factor issue, and instead assume a battery backup system. For each 100 MW of utility-scale solar generation capacity, the battery backup capacity needed for a mere four hours of power would be on the order of about 60 MW. Multiply that by 50 if, say, 5000 MW of utility-scale solar capacity were to be backed up with batteries. And if 24 hours of backup were deemed appropriate? Multiply that by six. A couple of weeks? Multiply by 14. Etc.
For a battery backup system providing one week of backup power – 10,080 mWh— a very conservative estimate is about $400,000 per mWh, or a total of over $4 billion. For the utility-scale solar system combined with battery backup: about $8.8 billion, which does not include transmission, distribution, black start assets, substations, etc., which collectively are by far the bulk of the costs. And can anyone believe that such a system would last as long as a conventional system?
Getting priorities straight is crucial, particularly given that residents of the commonwealth have suffered enough. Cost efficiency and reliability, first. Climate politics, last.
Benjamin Zycher is a resident scholar at the American Enterprise Institute.