Moving from Oil Dependence to Clean Energy
“We have adopted Energy Reform that will help us reduce our excessive dependence on expensive and environmentally harmful oil, in favor of cleaner, safer, healthier alternative sources, such as natural gas and renewable energy sources, like, solar and wind.” -Puerto Rico Gov. Luis Fortuño, State of the State Address, Feb. 2011
Breaking Puerto Rico’s environmentally and economically damaging dependence on oil for energy production.
- Puerto Rico currently produces 69% of its power from oil, with 15% coming from natural gas, 15% from coal and 1% from renewables. By comparison, the U.S. as a whole relies on oil for only 1% of power generation.
- According to the U.S. Energy Information Administration, Puerto Rico’s kWh cost in 2009 was 21.69 cents, more than double the U.S. mainland average kWh cost of 10.2 cents. The price differential was even more pronounced during the recent spike in oil prices, with the average retail price reaching 24 cents per kWh.
- Puerto Rico’s reliance on oil fired generation, which is dirty and expensive, is environmentally and economically debilitating. The dependence negatively affects island consumers and businesses and represents a persistent drag on the economy.
- As a result, Governor Fortuño has made switching to cleaner, cheaper sources of energy, such as natural gas and renewables, a top priority.
Deploying a comprehensive energy strategy focused on alternatives to oil.
- Puerto Rico is pursuing a comprehensive strategy to address Puerto Rico’s high energy costs and environmental harm caused by burning dirty oil.
- New energy reform laws signed by the Governor in 2010 lay out incentives for alternative energy development and commit the government to ambitious goals for the growth of renewable energy. These include the Energy Diversification Act (Law No. 82), that sets up a renewable portfolio standard and the Green Energy Incentive Act (Law No. 83).
- Through the Energy Diversification Act, the government’s new targets for energy generation are: 12% of power generation through renewable and alternate sources by 2015, 15% by 2020 and 20% by 2035. The law also created a renewable energy certificate market to help finance utility-scale renewable generation.
Working to dramatically increase alternative energy development in Puerto Rico.
- The Puerto Rico Electric Power Authority (PREPA) has signed contracts for the purchase of 600 megawatts of renewable energy, primarily solar, wind and waste to energy.
- Over $1 billion in potential private sector investment is being pursued for a portfolio of wind, solar and waste-to-energy projects.
- Puerto Rico’s new Green Energy Fund will enable the Government to co-invest $290 million in renewable energy over the next 10 years. The first year of funding, which began July 1, will provide $20 million geared toward the development of small and medium-sized solar and wind projects. The Green Energy Incentives Act also creates several special tax exemptions for companies engaged in renewable energy generation.
- Puerto Rico is working to develop a market for electric vehicles, especially for the island of Vieques. The Government recently signed a Memorandum of Understanding with Nissan to introduce and incentivize the use of the Nissan LEAF zero emission vehicle, including exploring the creation of a battery recharge network on the Island.
Using cleaner, safer, and cheaper natural gas while the promise of renewables is realized.
- Renewable energy represents Puerto Rico’s long-term energy future, but it will not provide significant short-term economic savings because technologies continue to be costly and take years to deploy to maximum capacity.
- That’s why in the near term, Puerto Rico is transitioning its oil burning, electrical power plants from petroleum to cleaner, safer, cheaper natural gas.
- The Vía Verde project involves the construction of a 92-mile, state-of-the-art pipeline between PREPA’s main power plant on the southern coast of the island, which currently uses natural gas, and the system’s other, oil-fired power plants on the northern coast, which currently serve the majority of Puerto Rico’s population. The project’s route was carefully planned to run close to highways and away from communities.
- Extensive public hearings have been held on the project, including three full day hearings by the Puerto Rico Environmental Quality Board and three hearings by the Puerto Rico Planning Board. All environmental review documents have been posted on public websites and a 30 day public comment period was provided. In addition, PREPA is continuing to work to ensure the project meets all applicable federal environmental and safety criteria – just as is required for every similar project around the country.
- Natural gas is better for the environment: When complete, Via Verde will decrease carbon emissions by 64% and greenhouse emissions by 30% – a massive environmental savings. Via Verde will help PREPA comply with EPA’s emissions regulations.
- Natural gas is safe: The Via Verde project is subject to full compliance with all federal regulatory design and installation requirements. Natural gas is used widely and safely throughout the United States, along with the rest of the world.
- Natural gas is cheaper: Puerto Rico’s extreme reliance on oil leaves families and businesses vulnerable to surging global prices, which have risen 30% just this year. The cost of natural gas is at its lowest level in nine years. PREPA’s energy diversification efforts, including the transition to natural gas of which Via Verde is a key component, are estimated to save individuals and businesses as much as $1 billion per year.