Almost 90 MW of residential solar was added in Puerto Rico from July through September, said Max Issokson, a senior research analyst at Wood Mackenzie, based on data from utility Luma Energy. That represents the U.S. territory’s second-best quarter ever, he said.
Issokson spoke at the annual conference of the Solar and Energy Storage Association of Puerto Rico, presenting highlights from a Wood Mackenzie report titled “When the grid dies, solar and storage thrive: How a crumbling grid gave rise to a solar superpower in Puerto Rico.”
Referencing Hurricane Maria and the extended loss of power that caused loss of life in Puerto Rico, Issokson said “the growth here has been a direct response to a fragile and unreliable grid, which is unfortunate, but is also what’s sustained the market.”
Puerto Rico now has about 1,250 MW of residential solar, based on quarterly data that Issokson presented combined with U.S. Energy Information data through year-end 2023.
The U.S. territory will add about 330 MW of residential solar next year and 380 MW in 2027, WoodMackenzie projects.
Issokson said that given Puerto Rico’s median income of about $25,000, many residents don’t have the means to buy a residential solar system through cash and loans. As a result, third-party ownership financing has accounted for 70% to 80% of the residential market there, dominated by Sunnova and Sunrun.
Wood Mackenzie estimates there are 185,000 batteries across Puerto Rico, of which 81,000 are enrolled in a virtual power plant. The battery attachment rate for new residential solar has reached 100%, Issokson said.
Puerto Rico will add more than 3 GWh of residential energy storage through 2029, second only to the firm’s projected additions for California, according to a slide presented by Issokson.
The analyst attributed Puerto Rico’s residential solar and storage growth largely to high electricity prices due to imported fossil fuels, third-party ownership financing, and “one-to-one” net metering that is publicly supported by “an understanding that resilience is an important part of survival.”
Utility-scale
In 2020, the Puerto Rico Energy Bureau ordered the utility PREPA to contract for 3.75 GW of utility-scale solar and 1.5 GW of four-hour battery storage via six procurement rounds by mid-2023.
Carlos Fernandez, an attorney and capital member with McConnell Valdés, reported at the conference that to date the procurements have resulted in projects under construction with 440 MW solar and up to 485 MW storage. Projects in the financing stage or that have secured financing total 230 MW solar and 510 MW storage.
PJ Wilson, president of the Solar and Energy Storage Association of Puerto Rico, said last year that the slow pace of utility-scale solar development can be traced to an action by the Financial Oversight and Management Board (FOMB) for Puerto Rico, which was created by a 2016 federal law to restructure the territory’s debt, including PREPA’s borrowings.
PREPA had negotiated, between 2018 and 2020, the procurement of 600 MW of utility-scale solar, and Puerto Rico’s energy regulator had formally approved the projects, Wilson said last year. But then the FOMB announced in mid-2020 that it was canceling 450 MW of the 600 MW of project capacity.
As a result of that FOMB action, Wilson said, developers “deemed Puerto Rico to be a very high-risk market and a lot of them left the market.”
Looking ahead, Fernandez reported that this year, Puerto Rico’s governor issued an executive order for an expedited solar procurement. “Another major development,” he said, is a program to allocate storage at existing facilities using existing interconnection points, “enabling much shorter timelines,” with at least six projects approved. And the utility Genera is developing several storage projects co-located at legacy plants, with funding from the Federal Emergency Management Agency, he said.
The WoodMac report is available here.
The Puerto Rico solar and storage conference drew 350 participants.
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