Puerto Rico is pushing LNG when it says it’s shifting to renewables

After Hurricane Maria ravaged Puerto Rico five years ago, toppling the island’s electricity system, the government vowed to build a cleaner, more resilient grid in its place. To date, the progress has been piecemeal — so much so that residents are taking matters into their own hands, installing tens of thousands of rooftop solar systems. Now regulators are finally on the cusp of approving dozens of large-scale solar and battery storage projects, slowly moving Puerto Rico closer toward its goal of using 100 percent renewable electricity by 2050. At the same time, though, experts say the island may be undermining this effort by continuing to invest in fossil fuel infrastructure. 

Perhaps no project better exemplifies this conundrum than the liquefied natural gas (LNG) import terminal in San Juan, the U.S. territory’s capital city.

Nestled in the bay not far from San Juan’s iconic citadel, the terminal is owned and operated by New Fortress Energy, a New York City–based gas company. Tanker ships deliver LNG to the terminal, which supplies gas for the city’s main power plant and Puerto Rico’s industrial facilities.

The terminal has been steeped in controversy since it began operating two years ago, not least because New Fortress never sought approval from the U.S. Federal Energy Regulatory Commission (FERC) to build the facility. Last year, the independent government agency ordered New Fortress to retroactively submit the terminal for FERC’s review and potentially undergo further environmental studies. The company complied last September, but not without launching a legal challenge. 

In mid-June, a federal appeals court sided with FERC and upheld the review, though the terminal will continue operating while the process plays out.

New Fortress, which did not reply to requests for comment, has previously accused FERC of engaging in ​“arbitrary-and-capricious decision-making” in claiming jurisdiction over the LNG terminal. 

Local environmental groups, energy experts and faith leaders applauded the court’s decision, saying that it will give neighboring communities a chance to formally weigh in on the terminal for the first time.

The June 14 ruling is ​“a relief” that will ​“help prevent future companies like New Fortress Energy from operating without any oversight and permits,” Sary N. Rosario Ferreira, a member of El Puente’s Latino Climate Action Network, said in a statement released by Earthjustice.

“This motivates us to continue demanding ecojustice for our communities,” she said.

Rosario Ferreira is a pastor in northern Puerto Rico, and she recently joined a dozen other Christian leaders in filing comments to FERC. The coalition urged commissioners to take into account not only the terminal’s current activities but also the possibility of future expansion — a development they said would threaten ecosystems and people’s health in surrounding neighborhoods.

“We emphasize our now escalated fear” of expanding the facility ​“that is so close to our homes, schools and places of worship,” the group wrote in a letter to FERC.

Bigger LNG ships and more gas-burning power plants

Puerto Rico does seem poised to ramp up gas consumption at a time when it’s supposed to be moving rapidly to cleaner sources of power. The island’s near-term target calls for achieving 40 percent renewable energy by 2025 — up from just 5 percent today. 

This fall, the U.S. Army Corps of Engineers will begin dredging the San Juan Bay to deepen the shipping channel. The $59 million project is expected to allow the LNG import terminal to receive much larger tankers, including ships with six times the LNG-carrying capacity of current supply vessels, according to Puerto Rico’s port authority. 

The Puerto Rico Electric Power Authority (PREPA), the government-owned utility, is also proposing to increase gas-fired power plant capacity in San Juan and other cities. 

PREPA has touted gas as a cheaper, cleaner-burning alternative to the expensive, heavily polluting petroleum used in the island’s aging thermal power plants. In the first few months of this year, nearly half of Puerto Rico’s electricity generation came from petroleum, which results in not only greenhouse gas emissions but also elevated levels of smog-forming sulfur dioxide, which can damage people’s lungs.

In 2019, PREPA awarded New Fortress a five-year, $1.5 billion contract to supply gas to the grid and to convert two combustion turbines — together totaling 440 megawatts — at the San Juan power plant from oil to gas. More recently, PREPA has proposed converting four more oil-burning units at the facility, which would add another 237 megawatts of gas-fired capacity.

Separately, the utility is studying plans to build a new gas-fired power plant of up to 400 megawatts in the San Juan area. PREPA says it is also in early discussions with AES Puerto Rico, which operates the island’s coal-fired power plant, about replacing coal with gas or other alternatives when AES’ operating agreement expires in 2027. The 500-megawatt facility on the southern coast supplies about 20 percent of electricity on the island’s grid.

“There’s been a strong push to convert Puerto Rico from an overdependence on imported oil to a dependence on imported gas,” Cathy Kunkel, the energy program manager for Cambio, a nonprofit environmental organization in San Juan, told Canary Media.

In filings to energy regulators, PREPA officials pointed to the slow-moving, red-tape-laden process of connecting large-scale solar, wind and battery storage projects to the electric grid. Until those projects are completed, keeping existing power plants in service will be necessary to maintain a ​“safe and reliable electrical service,” the utility said.

At the same time, PREPA noted that converting four more diesel units in San Juan could take about a decade to complete — a period during which thousands of megawatts of new renewables projects are slated to come online. Building new gas plants and converting more units risks locking in decades of future fossil fuel use, Kunkel said.

It also overlooks the role distributed energy resources like rooftop-solar-and-battery systems can play in more immediately providing Puerto Ricans with clean, reliable electricity. As of June, some 55,000 such systems were in place at homes, offices and critical facilities across the island, and many of them could be interconnected, distributing power within communities or directly to the grid to help avoid blackouts.

“PREPA has never really taken seriously the idea of going very aggressively into the rooftop solar space,” Kunkel said, noting that the utility has access to billions of dollars in federal recovery funds to help modernize the grid and increase renewable energy.

Reliability issues plague the grid and gas terminal

Concerns about growing gas use intersect with another controversial development in Puerto Rico: the privatization of the island’s power plants.

Later this year, Puerto Rico is expected to put 17 power generation units currently run by PREPA under private management. Eight companies are considered qualified to bid for the contract, including Encanto Power LLC — which is a subsidiary of New Fortress Energy — and the island’s other major gas provider, EcoEléctrica.

The privatization is part of a larger effort to manage PREPA’s $9 billion debt load. In 2020, the utility transferred control of the publicly operated transmission and distribution system to Luma Energy in a 15-year contract. The private consortium of Canadian and U.S. companies now operates the grid and handles post-Maria reconstruction work.

Luma is facing widespread public backlash and legal challenges as persistent outages, sweeping blackouts and frequent voltage surges continue to plague the centralized electricity system. Critics of privatization say they’re concerned that adding power plant operations to the mix will only further exacerbate reliability issues and delay the island’s transition to renewable energy.

New Fortress Energy is also facing scrutiny from regulators and residents, and not only because of the dispute with FERC. 

Last October, New Fortress took the LNG terminal out of service for unscheduled maintenance work and didn’t bring the facility back online until late January. In a meeting with the Puerto Rico Energy Bureau, which regulates the island’s energy system, PREPA officials explained that they had to revert to burning oil in their San Juan power plant instead of gas during that period.

It’s not yet clear whether or how the FERC review will ultimately affect operations at the terminal, said Raghu Murthy, an attorney for Earthjustice, a nonprofit legal organization.

During the federal court proceedings, Earthjustice submitted an amicus brief on behalf of Puerto Rican community groups, which have called the LNG terminal a ​“ticking time bomb,” given the potential for fires and gas releases at LNG facilities. In early June, an explosion occurred at an LNG export facility in Texas, which spewed excessive emissions of carbon monoxide, sulfur dioxide and other harmful pollutants into nearby communities.

“We’re hoping that the [FERC] process will focus on the impacts on these environmental justice communities and the safety risks and climate impacts” of the LNG terminal, Murthy said.