June 21, 2024

This story was originally published by Canary Media.

In Puerto Rico, residents current to rooftop solar and backup batteries in search of more reliable, affordable – and cleaner – alternatives to the central power grid. Fire stations, hospitals and schools continue to add solar-plus-battery systems each year. So are families with urgent medical needs and rising utility bills. The technology has become nothing short of a life line for the US territory, which continues to be plagued by prolonged power outages and extreme weather conditions.

But a political challenge by a powerful government entity threatens to slow that progress, according to local solar advocates and Democratic members of the U.S. Congress.

The new development, they warn, could make it especially difficult for communities and lower-income households to access the clean energy technology. Puerto Rico could also lose the momentum it needs to meet its target of generating 100 percent of electricity from renewable energy by 2050.

At issue is Puerto Rico’s net metering programwhich compensates solar-equipped households for the electricity their panels supply to the grid.

In January, Puerto Rico Governor Pedro Pierluisi, a Democrat, signed a bill extending the island’s existing net metering policy until 2031. later notice that the program is key to meeting the government’s mandate to “promote and encourage solar systems in Puerto Rico.” But the Financial Supervision and Management Boardor FOMB, is pushing to overturn the new law – known as Act 10 – claiming it undermines the independence of the island’s energy regulators.

The battle is brewing at a time when the US government is spending more than a billion dollars to accelerate the adoption of renewable energy in Puerto Rico, including a $156.1 million grant through the Solar for All initiative which focuses on small-scale solar power. The goal of these investments is to reduce planet-warming emissions from Puerto Rico’s aging fossil fuel power plants, while also keeping the lights on and lowering energy costs for the island’s 3.2 million residents.

Solar panels cover rooftops in a Puerto Rico neighborhood.
Sun walk

In a May 17 letter, nearly two dozen US policymakers urged the FOMB to preserve net metering. Among the letter’s signatories were some of the leading clean energy advocates in Congress, including US Representatives Alexandria Ocasio-Cortez and Raúl M. Grijalva, and Senators Martin Heinrich and Edward Markey.

“Any attempt to reduce the economic viability of rooftop solar and batteries by cutting back net metering must be rejected at this critical stage of Puerto Rico’s energy system transformation,” the policymakers wrote.

Today, Luma Energy, the private consortium that operates the island’s transmission and distribution systems, gives customers credits on their utility bills for every kilowatt-hour of solar power they provide. The incentives help justify the cost of installing rooftop solar and battery systems, which can run about $30,000 for an average-sized system, according to the Solar and Energy Storage Association, or SESA, of Puerto Rico.

About 117,000 homes and businesses in Puerto Rico are enrolled in net metering as of March 31, 2024, with systems totaling more than 810 megawatts in capacity, according to the latest public data provided by Luma.

That’s up from more than 15,000 net metering systems with a total capacity of more than 150 MW in 2019 — the year Puerto Rico adopted its 100 percent renewables goal under Act 17.

“One of the main managers [of solar adoption] here is the search for resilience,” said Javier Rúa-Jovet, the chief policy officer of SESA.

“But it also has to be economic. And if net metering isn’t there, it won’t be penciled in in a way that people can easily afford,” he told Canary Media. He said that net metering is “the backbone policy that allows people who are not rich to install solar and batteries.”

At the same time new programs start stitch all these individual systems together in ways that can benefit all electricity users on the island.

For example, the clean energy company Sun walk recently enrolled 1,800 of its customers in a “virtual power plant,” or a remotely controlled network of solar-charged batteries. Since last fall, Luma has been harnessing that 15 megawatt-hour network more than a dozen times to avoid system-wide blackouts during emergency power events, including three consecutive days last week.

Renewable energy now represents 12 percent of the island’s annual electricity generation, up from 4 percent in 2021, based on SESA’s analysis of Luma data. Small-scale solar and battery installations, made affordable by net metering policy, account for the vast majority of that growth — and undoing those incentives could stall progress, as has been the case in the continent of the USA

Until recently, Puerto Rico’s net metering program seemed safe from the upheaval influence other local policies. A handful of states – especially Californiathe nation’s rooftop solar leader — has taken steps to dramatically reduce the value of rooftop solar, often arguing that the credits make electricity more expensive for other ratepayers.

Before Gov. Pierluisi signed Act 10 into law, the Puerto Rico Energy Bureau was scheduled to reevaluate the island’s net metering policy — a move that solar advocates worried would lead to weaker incentives.

Despite significant progress, the area is still far from reaching its short-term target of reaching 40 percent renewable energy by 2025, and many see rooftop solar and batteries as the key to closing that gap.

That’s why Puerto Rico’s policymakers chose to delay the bureau’s review and lock in the existing financial incentives for at least another seven years. Under the new law, regulators cannot undertake a comprehensive review of net metering until January 2030. Any changes won’t take effect until next year, and even then they’ll only apply to new customers.

However, the Financial Oversight and Management Board in April urged the governor and legislature to undo Act 10 and allow regulators to study net metering earlier. When this did not happen, the council made a similar appeal in a May 2 letterthreatens litigation to have the law declared null and void.

The FOMB was created by federal law in 2016 to resolve the fiscal crisis facing Puerto Rico’s government, which at one point owed $74 billion to bondholders. The council consists of seven members appointed by the US president and one ex officio member appointed by the governor of Puerto Rico. The entity played a central and controversial role in reforming the electricity system — which was fragile and badly mismanaged even before 2017’s Hurricane Maria all but destroyed the grid.

A man in a colorful long-sleeved shirt adjusts a meter on the side of a house.
Sun walk

According to the FOMB, Act 10 is “inconsistent” with a fiscal plan to restructure $9 billion in bond debt owed by the state-owned Puerto Rico Electric Power Authority, which make the money to repay its debt by selling electricity from large-scale power plants. Act 10 also “intrudes” on the Puerto Rico Energy Bureau’s ability to operate independently, the board wrote, as it prohibits the bureau from studying and reviewing net metering on its own schedule.

“Puerto Rico must not regress to a time when politics rather than public interest … determined energy policy,” Robert F. Mujica Jr., FOMB’s executive director, wrote in the letter.

While the board said it “supports the transition to more renewable energy,” its members oppose the way Puerto Rico’s elected officials have acted to protect what is one of the island’s most effective renewable energy policies.

In recent days, solar advocates, national environmental groups and Democratic lawmakers in Puerto Rico and the U.S. Congress have moved quickly to defend Puerto Rico’s net metering expansion. They claim that efforts to undo Act 10 are less about maintaining the bureau’s independence and more about paving a way to overhaul net metering.

“For the board to basically attack net metering really goes against what my understanding was for their creation, which was to look out for the economic growth of the island,” said David Ortiz, the Puerto Rico program director for the nonprofit. Solar United Neighbors.

The renewable sector in Puerto Rico contributes about $1.5 billion to the island’s economy each year and employs more than 10,000 people, according to the May 17 letter from U.S. policymakers.

Ortiz said his organization “really relies on net metering” to support its range of projects on the island. Most recently, Solar United Neighbors opened a community resilience center in the town of Cataño, which involved installing solar panels on the roof of the local Catholic church. The nonprofit also helped residents in three neighborhoods band together to negotiate discounted rates for solar-plus-battery systems on their individual homes.

Javier Rúa-Jovet of SESA noted that net metering has already undergone extensive revision. It includes a two-year study overseen by the US Department of Energy, known as PR100, which analyzed how the island can meet its clean energy targets. The study suggests that net metering is unlikely to start driving up electricity rates for utility customers until after 2030, the year the Energy Bureau plans to revise the current rules. PR100’s main finding, which is that Puerto Rico can get to 100 percent renewable energy, assumes the current net metering compensation program continues through 2050.

The fiscal oversight board requested that legislation to repeal or amend Act 10 be enacted no later than June 30, the last day of Puerto Rico’s current legislative session. After that point, the FOMB says it will take “such actions as it deems necessary” — potentially setting the stage for another net-metering skirmish in the U.S. this summer

If policymakers heed the FOMB’s demands, advocates fear it could become more difficult to develop clean energy systems, especially within marginalized communities that already bear the brunt of routine power outages and pollution from fossil fuel-burning power plants on the island.

“In a moment where the federal government is investing so much money to help low-income communities access solar power, the FOMB on the other hand just doesn’t make sense,” Ortiz said.

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