Lack of PREPA generation capacity raises questions
3 min readLack of operating Puerto Rico Electric Power Authority generating capacity has raised concerns about PREPA’s ability to provide adequate service and about bondholders’ ability to gain a better recovery if they win an appeal.
Last week, Genera PR, the private operator of PREPA’s generation system, released a status summary of PREPA’s generation facilities as of the end of January, saying only one of 14 was operating normally. Five were shut down altogether for repairs. Only 34% of PREPA’s electrical production is now available, according to the document.
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The First Circuit Court of Appeals is currently considering
If rates were increased to improve bondholder payments, Puerto Rico’s economy would be harmed, making a “full recovery of their claim even more unlikely,” Marxuach said.
In February, the U.S. Department of Energy released a study saying Puerto Rico needed hundreds of megawatts of additional capacity to minimize outages. “If this situation is not addressed soon, it is highly probable we will have rolling blackouts during the summer,” Marxuach said.
However, Puerto Rico Clearinghouse Principal Cate Long said, Genera PR’s report excluded electric sources PREPA draws upon, like outside private companies and temporary generators. If these are added, available supply rises from 1,454 available megawatts to 2,854 megawatts and “the system has sufficient capacity to manage peak load.”
Capacity seems to have decreased
Genera told The Bond Buyer it has four initiatives addressing lack of generation capacity: making short-term repairs by June 1, which are expected to add 966 MW of capacity, ordering backups of critical components that frequently cause outages, replacing by the end of 2026 old generator units used during peak demand periods, and adding 430 MW of battery power storage.
In 2019, Puerto Rico mandated a schedule to transition to renewable power, with 40% of electricity to come from renewable sources by 2025, 60% by 2040, and 100% by 2050. Currently, 2%-3% comes from renewable sources and an analyst who follows PREPA said Puerto Rico won’t make the 40% level deadline.
Long said a central question was when PREPA would start bringing 2,500 MW of solar projects online. “They are years behind schedule on executing those projects.”
In mid-March Gov. Pedro Pierluisi announced his government would purchase temporary generators for the power system, which will provide 300 MW of capacity.
The temporary generators “will allow stability to the island’s electrical system while the scheduled work is carried out to repair and maintain the generating units,” said PREPA Executive Director Josué Colón. These generators will serve “the community until December 2025.”
The PREPA analyst said Puerto Rico would have to increase reliance on natural gas to generate electricity for the next few years. A Puerto Rico law ends the use of coal-fired power as of 2028. Since Puerto Rico now gets 19% of its power from a coal-fired plant, the phase-out will be a real challenge, he said.