Twenty days after Hurricane Maria ravaged Puerto Rico with a ferocity not seen since Katrina, the US Commonwealth’s population still reels from near-single digit percentage access to electrical power. The PR Electric Power Authority (PREPA) is in a race against time - restoring power to a restless populace that has been defecting from the grid for over a decade. What does the future hold?
Into this complex situation wades in perhaps the most famous billionaire on the planet to offer a green, sustainable and innovative solution for Puerto Rico’s power needs. No less than Elon Musk has taken interest in Puerto Rico’s energy future via a Twitter conversation with Governor Ricardo Roselló. The Twitter storm of replies to Musk’s’ announcement is cathartic for a population beset by unstable, unreliable power for over a decade. The people - and government - of Puerto Rico are clamoring for change, and Elon Musk’s offer is a bendicion de Dios. What could this mean for Puerto Rico’s energy future?
Over my professional life I found one aphorism always holds true: “Nothing is ever as good, or as bad, as it first seems.” Variously attributed to Patton, Shakespeare and others, it reminds me of another quote from my very first vocation, aviation: “Unless you are on fire, your first step in any emergency should be to wind your watch.” In other words: when stuff gets crazy, hold your horses and go fast by thinking slow. Here are three things to consider as the Twitter storm over Tesla’s offer wanes:
First, the mere fact that Gov. Roselló has enthusiastically supported Musk’s offer is in itself a very positive development. It clearly signals to private investors that the island is seriously considering innovative solutions to its energy challenge. Investors are correct in interpreting this as a signal that everything is on the table, and that those with truly innovative solutions (backed by smart capital) will be warmly considered by the government.
Second, it would be naïve to think that all is clear sailing now that Musk has shown an interest in solving another island’s power crisis. Puerto Rico’s energy context requires solutions that are quite literally orders of magnitude more complicated (i.e., expensive) than other Tesla successes. Puerto Rico’s pharmaceutical cluster base - a key economic engine for the island - is just one example of verticals that just cannot be served by current technology without a wise energy mix. Puerto Rico has geographic, logistical, and transportation challenges that must be addressed with an integrated energy strategy. Tesla’s solutions will be necessary, but insufficient on their own to truly transform PR’s energy sector.
Third, and possibly most important is the true impact of Elon Musk’s offer: it has reset mental models regarding energy strategy. In the span of 20 days - after a major hurricane no less - the average consumer in Puerto Rico now speaks of “renewables”, “micro grids”, “distributed generation” and “grid resiliency” with ease. Two days after Hurricane Maria only pundits were having lofty discussions regarding the future of Puerto Rico’s energy strategy. Now everyone on the island is asking “Why Not?” This acceptance - and resetting of the discussion - it the true impact of Elon Musk’s offer. Private investors seeking to solve Puerto Rico’s energy challenge now understand that they will have a much more educated - and demanding - customer base for their projects. Public entities now know that everything is on the table. And the government has uncorked the energy genie’s bottle and set expectations for the future quite high. That change in mindset is the real game changer.
So what? What is the potential future for PR after the Musk offer? Puerto Rico already has a nascent, if unexecuted, energy strategy that addresses microgrids, 50% renewables and a low carbon gas mix (using propane as a bridge fuel along with natural gas) to balance out demand. Musk’s offer now makes this politically and fiscally more achievable. We are already seeing submittals through PROMESA’s Title V Critical Projects Process focused squarely on renewables and more environmentally friendly energy mixes. There are currently over $1.5 Billion in energy projects in that pipeline - all submitted before Musk’s Twitter exchange and all broadly compatible with his (and Puerto Rico’s) transformational energy vision. With help from federal agencies to rebuild the grid to code (and potentially inject resiliency through new federal procedures), we expect far more project owners and private investors to dip their toe in the water now that the stakes, and the conditions for growth, have been set.
The vision many of us now consider possible is this: In ten years, Puerto Rico could have divested itself from heavy oil for power generation; transformed legacy fossil fuel units to sustainable gas mix; widely deployed renewables via distributed generation; developed municipal mini-grids matched to demand via innovative and responsive monitoring; and set itself to become a net energy exporter with far less environmental impact - and at far less cost - than today. All that would be wrapped with an independent and accountable energy regulatory authority. Puerto Rico could become the Energy Star of the Caribbean, setting the example - and conditions - for sustainable, cost effective and reliable power that acts as an engine for economic growth.
It is safe to say that Elon Musk will not be the only private stakeholder in this promising future. But he just may be the catalyst that started it all. Let’s start today to make this future a reality for the next generation living, working and growing in Puerto Rico. Lets make Puerto Rico literally shine again.
*Originally published in LinkedIn. Noel Zamot serves as the Revitalization Coordinator with the Federal Oversight & Management Board for Puerto Rico. Before back to back hurricanes, he was tasked with revitalizing the island's critical infrastructure through private investment. After Hurricanes Irma and Maria, this mission has taken new urgency. He remains committed to - and is bullish on - Puerto Rico's long term economic growth.