Sunrun has proposed quick deployment of solar-plus-storage virtual power plants across Puerto Rico, while clean energy groups found the island utility’s resource modeling disadvantaged solar, and showed that Hawaii is deploying renewables at twice the rate proposed for Puerto Rico. Their input came in the form of testimony on the draft integrated resource plan (IRP) submitted by the utility PREPA.
Sunrun’s testimony describes a virtual power plant (VPP) as an aggregation of solar and storage resources that “can be monitored and managed as a dispatchable resource.” The company described VPPs it has developed in New England, Hawaii, and California, and noted that Puerto Rico has hundreds of megawatts of solar potential suitable for VPPs at publicly owned buildings alone.
“The island keeps getting hit with blackouts,” said Sunrun’s Director of Policy & Storage Market Strategy Christopher Rauscher. In response, some residents are deploying solar and storage. Others could be encouraged to do so if they were offered compensation for the grid services they could provide by joining a VPP, said Rauscher, while the utility would still have attractive net costs for use of the storage.
Rauscher said that VPPs in Puerto Rico would be cost-competitive with utility-scale solar and storage “on a delivered energy basis,” largely because of avoided line losses, “which the IRP estimates are as high as 17%.” Moreover, he said, “customer-sited VPPs can be a tool for PREPA to hedge against the significant risk of grid or load defection.”
VPPs “must be procured before investment in [transmission and distribution] infrastructure or capacity,” he added, because VPPs can make much of that investment unnecessary.
Sunrun’s testimony spells out the logistics for how the firm would work with the utility to get VPPs up and running across the island.
Broken modeling process
PREPA’s IRP consultant Siemens “has needlessly included a 30% adder to the price of solar” in its draft IRP, said Anna Sommer, a principal with Energy Futures Group, in testimony on behalf of 11 local environmental groups. Siemens, which builds LNG infrastructure, also used a cost for gas-fired generators that is below recent pricing, she added, and likely understated the price for natural gas fuel.
One can only imagine how much more solar and storage the draft IRP would have specified without those biases, because PREPA did not comply with a requirement that it make its modeling transparent. PREPA, which used the Aurora utility model to develop its draft IRP, “failed to submit required modeling files,” testified Sommer, and “did not provide the [Energy] Bureau access to an Aurora license, nor did any intervenor have access to an Aurora license,” at PREPA’s expense.
PREPA also proposed to “overbuild dramatically,” testified Sommer, yielding “extraordinarily high reserve margins” that would require financing with higher electricity prices, which would induce grid defection and leave remaining customers to pay ever higher rates.
PREPA’s residential cost of electricity was 22¢/kWh-ac in September 2019, according to Agustín Irizarry-Rivera, a professor at the University of Puerto Rico Mayagüez Campus, in testimony in the same document, while the 2019 levelized cost of residential solar photovoltaic including storage was lower, at 21.6¢/kWh ac.
Overall, Sommer recommended that the Energy Bureau direct PREPA/Siemens to model higher levels of customer-owned generation, use a utility planning model that allows PREPA to share input files, output files, and model manuals with regulators and intervenors, and modify solar and gas prices in its modeling “to better reflect current realities.”
Half the rate of Hawaii
Over the next six years, PREPA’s draft IRP includes 1,800 MW of new solar plus 2,222 MW of new and converted gas-fired capacity and three new LNG import facilities, said Dr. Elizabeth Stanton, founder and director of the Applied Economics Clinic, in testimony for the Environmental Defense Fund (EDF).
Although sunny Puerto Rico has a population and peak electric demand “about double that of Hawaii,” Puerto Rico’s utility is “planning for less renewable and demand response capacity additions than Hawaii” through 2021, she noted—that is, at half the rate, based on Puerto Rico’s size. “Failing to build out renewables in the near term,” she added, will make it difficult to reach the renewable energy targets of Act 17-2019, Puerto Rico’s renewable energy mandate.
Part of the problem, Stanton found, is that “PREPA’s IRP places annual capacity expansion constraints on solar and battery storage, without limiting fossil fuel resources.”
Echoing Sunrun, she said that “IRP Exhibit 8-37 presents Siemens’ expectation that customer-owned rooftop solar generation is significantly less expensive than PREPA’s own generation.”
To get on track, PREPA “must constrain all modeling runs to follow Puerto Rican law, including Act 17-2019,” said Stanton. And PREPA “must issue a technology neutral RFP, and use the costs derived from RFP responses in its resource expansion modeling.”
“Secret” utility solicitations
The local environmental organizations and EDF joined in a motion “concerning PREPA’s secret requests for proposals,” in another indication of the challenges faced by Puerto Rico’s Energy Bureau. The motion says that PREPA has issued secret RFPs on several occasions since the beginning of the IRP proceeding, without obtaining prior Energy Bureau approval, in violation of Puerto Rico law. The motion calls for the Energy Bureau to issue a public notice that those RFPs are null and void, and to order PREPA to cancel them.
The Puerto Rico Energy Bureau rejected the previous PREPA/Siemens draft IRP in March 2019, and ordered the utility to refile a plan that complies with Act 17-2019. The current draft IRP includes a five-year action plan through 2023, and longer-range resource modeling through 2038.