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Rebuilding Physical and Institutional Energy Infrastructures in Puerto Rico Microgrids As Socio-Technical Systems

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Rebuilding Physical and Institutional Energy Infrastructures in Puerto Rico Microgrids As Socio-Technical Systems Fall 08 Washington Internships for Students in Engineering 18 Photo Credit: Tesla Rebuilding Physical and Institutional Energy Infrastructures in Puerto Rico Microgrids as Socio-Technical Systems Christina Chen Yale University American Institute of Chemical Engineers 2 Table of Contents Executive Summary ..................................................................................................................... 4 1. Why is this Important? .......................................................................................................... 6 2. Institutional Infrastructure and Social Actors ............................................................. 7 2.1 PREPA Background ......................................................................................................................................................... 8 2.2 PREC Background ............................................................................................................................................................ 9 2.3 Federal Partnering Agencies- DOE, USACE, FEMA ............................................................................................. 9 2.4 Partnering Non-Federal Agencies- Rocky Mountain Institute (RMI), New York Power Authority (NYPA), Congressional Research Service (CRS) ....................................................................................................... 10 3. Distributed Energy Resources (DERs), Microgrids and Renewable Energy (RE) .................................................................................................................................................. 10 3.1 Distributed Energy Resources (DERs) .................................................................................................................. 11 3.1.1 Generation DERs .................................................................................................................................................. 11 3.1.2. Energy Storage DERs ........................................................................................................................................ 12 3.1.3 Net Metering .......................................................................................................................................................... 12 3.2 Microgrids......................................................................................................................................................................... 12 3.2.1 Microgrids are multidirectional instead of unidirectional .............................................................. 13 3.2.2 Microgrids are Interconnected but Independent ................................................................................ 13 3.2.3 Microgrids Facilitate Integration of Renewable Energy ................................................................... 14 4. Current Status of the Energy Systems Infrastructure ............................................ 15 5. Electricity Generation is too far from Energy Consumption ............................... 16 5.1 Distributed Energy and Microgrids reduce the need for long distance transmission ........... 17 5.2. “Passive” DERs are quick and permanent investments that will aid the most vulnerable. 18 6. Excess Generation Capacity for a Declining Consumer Population ................. 19 6.1. Size and Functional Flexibility of Microgrids can help combat overbuilding .................................... 19 7. Puerto Rico is Dependent on Imported Fossil Fuels .............................................. 20 7.1. Puerto Rico Faces Import Barriers ....................................................................................................................... 21 7.2. Cost Competitive Renewables can decrease dependence on Imported Fossil Fuels......................... 21 7.3. Renewable Energy is Reliable and Resilient but cannot be connected to the Conventional Grid ....................................................................................................................................................................................................... 23 8. Generation Units require Long Overdue Maintenance due to lacking top- level management ..................................................................................................................... 25 8.1. Privatization as a solution for Mismanagement is met with Debate ..................................................... 26 3 8.2. Independent DER investment reinvents the Privatization debate and the Role of a Large Scale Public Utility............................................................................................................................................................................ 27 9. Cost and Funding of Microgrid Projects ...................................................................... 28 9.1. Federal Funding may not be enough for Microgrids and DERs at Critical Sites ............................... 30 9.2. Financing Vehicles for Microgrids ......................................................................................................................... 32 10. Strong Regulatory Action is needed for quick and equitable deployment of DERs and Microgrids ................................................................................................................ 33 10.1 Aggressive Targets increase learning curves and decrease installment time .................................. 33 10.3. Microgrid and DER Incentives .............................................................................................................................. 34 10.3. Clear Guidelines attract Investments while leaving room for Innovation ........................................ 34 11.0 Conclusions and Summary ........................................................................................... 35 4 Executive Summary On September 20, 2017, Hurricane Maria swept through the United States territory of Puerto Rico. Still recovering from Hurricane Irma two weeks prior, Puerto Rico suffered the longest sustained power outage in US history, the second largest in the world (3). Power generating units escaped major damage; nonetheless, Maria took down 80% of the island’s transmission and distribution system (9). Over 50% of Puerto Ricans were still without power two months after the hurricanes (17). By May 8, 2018, eight months after the category 5 hurricane ravaged the commonwealth, roughly 30,000 citizens were still without power (3). Damage from the hurricanes was compounded by an already weak infrastructure that existed before 2017, largely due to mismanagement and underinvestment by the Puerto Rico Electric Power Authority (PREPA). In a report released by the Puerto Rico Energy Commission (PREC) in 2015, PREPA’s budget allocations, operations, and infrastructure were described as an “emergency in the present day,” one that would require time, effort and funds to repair (6). In a 2012 report released by the Federal Reserve Bank on the recommendations to improve competitiveness of the Puerto Rican Economy, reform of energy sector was listed as one of the top priorities. Furthermore, out of all U.S. states and territories, Puerto Ricans shoulder the second most expensive utility rates in the U.S. ($0.24/kWh) despite having the third lowest poverty rate (43.5%) (27). As a result, relief efforts should not aim to simply restore energy systems to their original state but instead prepare for reconstruction that boosts system resiliency. Electricity Tariffs PR & US Within the first 8 months, the 30 27.97 commonwealth and its partners h) - 24.4 25 22.42 were only able to resort to 20 temporary restoration efforts due 15 12.99 Residential 10.47 to lacking resources and the 10 6.64 Commercial 5 Industrial urgency to return power to its 0 citizens as soon as possible. At the Puerto Rico United States Electricity Rate (USD Cents/kW current state of the electricity Figure 1: Electricity Tariffs, Source: EIA 2017 infrastructure, lasting sustainable solutions should now be prioritized over Band-Aid restoration efforts given that the problem at hand goes beyond the technical issue of unreliable electricity. Puerto Rico is a community that is vulnerable to natural disasters, limited in domestic sources of energy, and located in a geographic region that makes transport difficult. As a result, the island needs a complete restructuring of its petroleum dependent electricity infrastructure (1, 3). In addition to these natural geographic characteristics, Puerto Rico’s 5 economic crisis and political situation further complicates the reconstruction. In discussing the infrastructure necessary for resilience, there needs to be an understanding of the non-physical infrastructure within the energy system. When Hurricane Maria hit Puerto Rico, it was met with an island that had both its physical and institutional infrastructure in shambles. Politics and years of mismanagement within the island’s only electricity utility have lead PREPA to a title III declaration of bankruptcy. As a result, the problem at hand is not just damaged energy infrastructure, but also web of social, economic and political complexities that must be untangled as a collective body in order for the island to move forward. Of the many suggestions for lasting changes in Puerto Rico’s energy infrastructure, development of microgrid infrastructures and distributed energy resources (or DERs) have emerged as technologies to help achieve not just
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