Puerto Rico Sparks an Energy Revolution

Jul 22 - Planning

With power costs more than twice the U.S. national average, Puerto Rico needed an energy revolution if it were to ever rise out of its long economic funk. A year after taking office in 2009 - in the midst of the U.S. commonwealths five-year recession and a worldwide credit crunch - Gov. Luis Fortuno enacted a sweeping energy reform package aimed at reducing the islands nearly 70 percent reliance on imported oil for power production.

It includes incentives that are complemented by a federal program covering 30 percent of the costs of most renewable energy projects by U.S. firms. The government also adopted a Renewable Portfolio Standard that calls for Puerto Rico to produce 20 percent of its power from renewable sources by 2030.

Fortuno declared an "energy emergency," which bound government agencies to expedite permit and other approvals related to power projects, and pushed through a new energy code requiring standard hookups to renewable energy systems and mandating solar water heaters on all new commercial, government, and residential units beginning in 2013.

Meanwhile, government planners rushed ahead to draw up the rules of the new energy revolution. "Zoning regulations prior to 2008 did not even mention wind projects. The big concern was how agencies were going to evaluate projects given the absence of regulations," says Carlos Fernandez-Lugo, the head of Environmental, Energy and Land Use Practice Group at McConnell Valdes, one of the islands largest law firms.

Throughout 2010, the government streamlined its consolidated bylaws, which apply to more than 26 agencies. It implemented a new permitting process aimed at increasing transparency and significantly reducing permit review time. The laws include detailed zoning specifications for wind and solar projects.

The future need for renewable energy projects is also the "number one criterion" driving the development of a new master land-use and zoning plan for Puerto Rico, which measures 35 miles wide and 110 miles long, says Puerto Rico Planning Board president Ruben Flores- Marzan, aicp. The final document, dubbed "Tu Plan," or "Your Plan," will pass through a public hearings process this fall with an eye for approval before year's end.

"If we do not diversify our energy sources, the cost of electricity will continue to skyrocket and we will be unable to attract foreign investment or to move local investment," Flores- Marzan says.

The plan envisions prime agricultural areas coexisting with wind energy projects, smaller scale urban renewable energy projects, and innovations like solar power canopies suspended above highway toll plaza areas.

Collie Powell, a Pattern Energy senior developer, says a new green economy is already taking shape on the island. The company is developing a $215 million, 75-megawatt wind farm on farmland in the south coast town of Santa Isabel, which will be the largest in the Caribbean when it becomes operational in November.

Another company, AES Ilumina, is developing a $98 million, 24- megawatt solar energy project in the southeast town of Guayama, which is also expected to come online by year's end. Neil Watlington, AES Iluminas project director, says that "facilitating zoning and environmental permitting is very important and removes some uncertainty and cost concerns," adding that the firm had all major project permits within six months.

The Pattern and AES projects are among more than two dozen under development that have signed power purchase agreements with the government power utility.