Castaner, Puerto Rico preps for microgrid RFP to spur solar + storage transition
Nestled between lush mountains and miles of colorful vegetation lies the remote Puerto Rican village of Castaner, a rural community in the central-western part of the island bordering the municipalities of Lares, Adjuntas, Maricao, and Yauco. Although officially part of the municipality of Lares, Castaner has taken the lead when it comes to economic and energy development and boasts a successful track record of community-driven projects.
After Hurricane Maria made landfall in 2017, Castaner lost power for six months, severely impacting all aspects of daily life for the village's residents. The experience laid bare the need to address vulnerability through new, resilient solutions.
The move towards more reliable power will begin with a solar + storage microgrid project as part of an initiative led by The Solar Foundation and the PathStone Corporation to expand the solar industry in Puerto Rico and build more resilient communities. The project, which will launch construction later this year, will directly benefit small businesses that provide essential goods and services for Castaner residents, and will offer critical backup power in the event of future interruptions to the power grid.
“We have a highly centralized grid that has roughly six or seven large generation plants located in different areas of Puerto Rico, and 30,000 miles of distribution lines in an island that distributes power to 3.5 million people,” Carlos Velazquez, Program Director for The Solar Foundation in Puerto Rico, told NPM. “And you have this enclave of 4,000 people 30 minutes away from any other center of population. What kind of priority do you think that is to the centralized grid? It is a very vulnerable community. That community deserves the same quality of life and the same reliance of energy that every other place in Puerto Rico has.”
Along with The Solar Foundation and the Microgrid Laboratory at the University of Puerto Rico in Mayaguez (UPR-M), development of the project will be supported by the Puerto Rican Solar Business Accelerator (PRSBA), which is working to transform the island's energy system through solar workforce development, expanded financing options, and technical assistance to solar businesses.
The microgrid is expected to serve as an example for other communities hoping to develop similar renewable energy projects.
“They haven't just sat back on their hands and done nothing,” Velazquez said. “Castaner, historically, is a very interesting district. It is not a city; it is not a town. It exists within another municipality, but they have taken ownership of a lot of their health and economic development initiatives. Castaner has one of the only community-run hospitals in all of Puerto Rico, which has a board of professionals and community members that tend to thousands of people. People got their Covid vaccines there. They also have agricultural initiatives like coffee, vanilla, and cacao.”
Castaner was chosen from a group of nine applicants following a rigorous selection process, which included criteria such as history of community organization capacity and historical underperformance of electrical service.
“As we started the narrative that Puerto Rico needed to transition from individual homes to a more community-based solution around the issue of energy resiliency, a lot of communities have raised their hand and said, ‘We want to be part of this, where do we sign up?’” Velazquez said. “For this first process, we had nine communities fill out the full application, and when I say full application, I mean hours and hours of work. And then in the middle of Covid, allowed us to go in and visit and validate the information, which took four months. So, the engagement of nine communities for four months I think tells you a lot--that communities are hungry to participate in their own energy future."
Once the conceptual microgrid designs are approved by the community, the design will then be brought to a competitive solicitation.
“What we’re going to be representing in the RFP is a well-cured group of small businesses that are committed to having energy resiliency provided to their services via solar and storage,” Velazquez said. “We’re hoping to attract all kinds of developers that may include a developer that says, ‘I have my own financing alternative,’ which may be a community-based commercial PPA offer. Or it could be somebody that says, ‘Here’s my offer for building out the system and let the community work out the issues of financing.' And it may be anything in between. What The Solar Foundation brings to the table is to engage with the community that we have built trust with, and that's an asset for whoever brings in a response to an RFP.”
PREPA problems
Enacted in 2019, Puerto Rico's Energy Public Policy Act established a 100 percent renewable energy goal, along with supporting policies like universal access to energy and the transition from a centralized system to a distributed generation system powered by renewables. It also effectively ended the long-standing monopoly that has defined PREPA for decades.
But PREPA, beleaguered by the aftermath of its bankruptcy filing in 2017, seems far from ready to remove its grip and embrace a clean energy future. The agency has a long history of stymied project development and continues to erect needless hurdles around the development of renewable energy projects. And while Velazquez says that solar firms are eager to participate in project development across the island, they are, understandably, leery of the process.
“They want to participate but remember that Puerto Rico has a history of difficulty when it comes to transitioning from the status quo of fossil fuels to renewable energy,” he said. “PREPA is sort of not allowing this to go forward, so there’s a little bit of hesitancy. They say, ‘This is not going to be as easy as you say. We’re willing to put on the gloves with you and fight, but it's going to take a while.' They are aware.”
The impending privatization of PREPA has thrown even more uncertainty into the mix. Last year, LUMA Energy--a consortium of Canadian firm ATCO and U.S.-based companies Quanta Services and IEM--was selected by Puerto Rico’s Public-Private Partnership Authority to overhaul the island’s electricity transmission and distribution system under a 15-year contract with PREPA.
LUMA will initially be paid USD 70m, followed by USD 90m the second year and USD 100m the third year as part of a contract approved by a federal control board that oversees Puerto Rico’s finances. LUMA will receive USD 105m for each of the remaining years, with potentially USD 20m in bonuses.
Earlier this month, Puerto Rico Gov. Pedro Pierluisi called for amendments to the agreement, while lawmakers recently introduced a decision to delay implementation of the contract until early 2022.
Velazquez says the impending takeover has created uncertainty around the agency’s processes going forward, and questions whether LUMA can affect change.
“The internal governance of PREPA is so powerful--it’s been there for 20 years protecting certain interests, so we’ll see," he said. "If you are a small solar company and you want to get your business going, and it is taking your business six months to get permitted for a small project because of the arbitrary nature of the permitting process within PREPA, it's very difficult to build momentum. And PREPA knows this, so they put up all kinds of obstacles. The regulations are very specific about how the expedited permitting process should go, but they will grab onto any mistake. It is really bad. There has to be a whole fresh new start.”
In the meantime, renewable development will push on, with plans in the works for future microgrid projects on the island.
“A well-designed community-based microgrid has so many components that are positive for the community and for the economy,” Velazquez said. “You're going to have business continuity and people are going to have better quality of life because the bakery, for example, will be able to service during the three months of a power outage from the hurricane that we know is coming. Just because you live remotely should not mean you have to be vulnerable or go hungry, so I think we have to pay particular attention to certain areas of Puerto Rico.”