Battery Storage Accelerates Puerto Rico's Transition to a Distributed Energy Grid

The Puerto Rico Public-Private Partnerships Authority and the Puerto Rico Electric Power Authority (PREPA) recently issued a Request for Qualifications (RFQ) for utility scale energy storage projects. The proposal seeks to add nearly 200 MWh of batteries, enough to supply 5% of the island’s peak electricity demand, as it rebuilds in the wake of Hurricane Maria.

The RFQ calls for 10 20 MW/20 MWh battery electric storage systems to interconnect to 10 115 kV switchyards owned by PREPA. At an estimated cost of $3.8 million each, these systems must also have the flexibility and modularity to expand to 40 MW/160 MWh should the initial rollout prove successful. The battery energy storage systems (BESSs) will be required to provide a full range of ancillary services.

The BESSs must also help manage renewable intermittency and provide PREPA with grid operational flexibility. The selected private developer(s) will finance, design, construct, and maintain a BESS for a 10- to 30-year term while PREPA will control the system and be responsible for the energy needed to charge the batteries. It is expected that this project will provide net savings of $8 million to $12 million per substation.

Capacity versus Demand

Initially proposed by Tesla, this project is currently one of nearly 15,000 front-of or behind-the-meter battery storage projects underway in Puerto Rico by Tesla, Fluence, SunRun, sonnen, LG, AES, and others. Tesla alone claims to have 11,000 energy storage projects underway, including the batteries installed earlier this year at 662 high need locations across the island. As a result, Puerto Rico is shaping up to be one of the largest examples of Tesla deploying energy storage systems in a single market.

To put this into context, Puerto Rico used approximately 19,300 GWh during the year in 2015, with a peak demand of 3,685 MW. Considering recent Tesla deployment estimates of at least 160 MWh and the recent RFQ that seeks to add an additional 200 MWh of storage by 2019, it appears that Puerto Rico will be able to supply close to 10% of the island’s historical peak demand—or 43 minutes of the island’s total electricity needs in 2015—with battery storage.

However, it has been estimated that over 135,000 Puerto Ricans have relocated to the US mainland since the hurricane. It will be years before buildings and businesses are up and running again to provide a basis for previous energy demands. Therefore, it is becoming increasingly clear that Puerto Rico is planning for an energy future characterized by an increasingly distributed energy grid.

New Participation Models Needed

To fully exploit the capabilities that storage technologies can offer in terms of balancing system variability and supplying capacity during critical peak periods, the island’s energy leaders must recognize that accelerated adoption of emerging technologies has a way of addressing challenges while raising new ones.

As noted in Guidehouse’s Energy Cloud 4.0 white paper, as the proliferation of distributed energy resources (DER) assets across the grid continue, utilities, including PREPA, must look toward the future to develop a fully mature iDER platform that enables more dynamic optimization and innovation at the edges of the network. This will enable DER technologies like battery storage to mesh with DER management tools, ubiquitous communication infrastructure, data analytics, and sophisticated machine learning technologies to expand the market of products and services, including flexible renewables integration.

In the interim, Puerto Rico must quickly adapt by using competitive markets to expand the viability of electric storage resources into larger ancillary services, and wholesale energy and capacity markets that enable and support changes to the grid’s supply resource mix.