AAs we hit 100 days of the new Puerto Rico government’s administration

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AAs we hit 100 days of the new Puerto Rico government’s administration

September 11, 2025
11:59 am

AAs we hit 100 days of the new Puerto Rico government’s administration, this past month’s energy news was dominated by the implementation of federal and local changes to the energy direction on the island. Notably, the shift towards renewables, utility scale solar in particular, is being rolled back. New directives out of the Public Private Partnerships Authority (P3A), led by the former PREPA chief, and the Energy Bureau have ordered a new procurement process, this time prioritizing stable, base load power. This follows news from the end of February and into March that the Puerto Rican legislature has removed legal impediments to AES’ coal plant continuing to operate through 2032.

This restructuring of the energy paradigm in Puerto Rico is taking place at the same time as continued turmoil out of Washington. Trump Administration policies, speciﬁcally related to federal dollars ﬂowing or not, has put many programs previously ﬁnanced through the EPA, DOE, FEMA, and other agencies in limbo. The Loan Program Oﬃce (LPO), however, has indicated that previous commitments to utility scale solar projects contracted in Tranche 1 will be fulﬁlled. There is less certainty about their role in future renewable projects, raising questions about the cost of alternative capital for developing mostly gas projects and the ultimate cost for the consumer in Puerto Rico.

Meanwhile, PREPA’s bankruptcy continues. Judge Swain has pushed the litigation stay out further given negotiations have yet to bear fruit. The cost of this process ticks higher and as energy project developers think about the questions I bring up in the previous paragraph, the key risks associated with a bankrupt off-taker seemingly unmotivated to get out of bankruptcy continue to be a barrier to attracting competitive projects, rates, and technologies.

Puerto Rico Renewable Energy Paradigm Shift

In a stunning recognition of the obvious, Puerto Rico lawmakers have decided to focus on energy reliability, stability, and cost-effectiveness. This has involved extending gas contracts and reworking the procurement process to enable rolling submissions of base load power projects up to 400MW. Notably, they have also knocked down legislative obstacles to AES’ continued operation of their coal plant in Guayama. While not getting rid of 2050 renewable goals, the focus is now clearly on keeping the lights on as quickly as possible. One of the ﬁrst victims of this shift is the intermediary renewable targets that were largely seen as ambitious but unrealistic. This shift may alleviate some pressure on LUMA to interconnect renewables with a grid incapable of hosting such power, while at the same time aligning local goals with federal changes that will likely ignore solar and wind power project development over the course of the current term.

Pressure on LUMA

The governor campaigned heavily on removing LUMA and it turns out this isn’t so easy to do. LUMA is facing the pressure as if that is still a possibility, though, and my understanding is that the administration is framing the options as such: get your act together and save yourself or don’t and be sidelined or removed. Only one option is good for LUMA and it’s to improve operations. Working with stable power is obviously a key component of this and when we spoke with Genera PR’s VP of Operations Daniel Hernández a few weeks ago, this was a major theme of our conversation.

The Energy Bureau has clariﬁed working metrics as well as ﬁnes for incompliance. The P3A has removed the requirement to use union labor, which should open the supply-side gates for more qualiﬁed contractors, particularly local companies in Puerto Rico. And new electrical equipment continues to arrive to support substation repair, interconnection capacity, and grid stability.

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Federal Policy Changes

President Trump has made it clear that billions that had be directed to support renewable energy projects across the country will be clawed back. This has been met with cheers by his allies and apoplexy by his opponents, either for economic or environmental reasons. Local organizations in Puerto Rico have indicated the potential economic development detriments this policy change carries, suggesting that it will make continued recovery work immensely diﬃcult, not just in the energy sector but across broader infrastructure priorities. Nevertheless, a team from the Department of Energy was present in Puerto Rico in the middle of March to evaluate options and speak with leadership about the direction and trajectory of progress yet to be made.

Ironically, the Trump administration’s economic agenda to drive domestic manufacturing is bringing solar panel production to the US, including to Puerto Rico, where Solx will open a facility in Aguadilla to produce roughly 1GW per year of panels, mostly for local use.

https://www.theweeklyjournal.com/mainland/national/trumps-energy-chief-vows

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PREPA Debt

PREPA’s bankruptcy continues to be a Gordian Knot. Deadlines for motions are now set for April and May as bondholders, PREPA and the Oversight Board continue to debate the repayability of some or part of the bill due. PREPA continues to have insuﬃcient net revenues, echoed by the recently approved PREPA Fiscal Plan, which paints a dire picture of the future.

Other News

In other news, the PR Department of Housing has begun rolling out solar projects at public housing facilities. Sunnova, responsible for a majority of residential solar projects in PR, struggles in the market and teeters on bankruptcy, leaving a potentially enormous gap in ﬁnancing small scale solar in Puerto Rico. And the government watchdog on the island ﬁnds that roughly a third of all solar panels donated for schools in PR do not work.