The U.S. Department of Energy’s (DOE) Loan Programs Office (LPO) has announced a conditional commitment for a loan guarantee of up to $861.3 million in clean flexible energy. The loan guarantee will finance the construction of two solar PV farms equipped with battery storage and two standalone battery energy storage systems in Puerto Rico. The facilities will be located in the municipalities of Guayama (Jobos) and Salinas and will help provide clean, reliable and affordable power throughout Puerto Rico. The borrower is an indirect subsidiary of AES Corporation and TotalEnergies Holdings USA and is managed under a joint venture agreement between the two.
As part of President Biden’s Investing in America To create high-paying, high-quality jobs in communities across the country, this project will support approximately 750 construction jobs and more than 50 full-time jobs once fully operational. Today’s announcement also reinforces the Biden-Harris Administration’s deep commitment to rebuilding and modernizing Puerto Rico’s electric grid.
Collectively, the project includes 200 MW of solar PV and up to 285 MW of standalone BESS capacity. Annually, the solar PV installations will produce approximately 460,000 MWh of energy, enough to power approximately 43,000 homes, and increase the reliability of Puerto Rico’s electric grid and energy security. The co-location of the new solar and battery resources will help maximize the project’s energy production and improve grid stability.
Thanks to battery storage, the project can continue to supply energy to residents even in adverse weather conditions. Operation of the solar and storage systems – collectively known as Project Marahu – is expected to eventually replace existing fossil fuel-based generation.
Project Marahu will play an integral role in improving Puerto Rico’s energy resilience and affordability while helping Puerto Rico achieve its ambitious clean energy and climate goals.
The project will support the retirement of fossil fuel power plants that rely on imported fuel, increase renewable energy generation and increase the resilience of the electricity grid. The clean, affordable electricity generated by this project will replace the power produced by Puerto Rico’s diesel and coal-fired power plants, eliminating the pollution associated with these plants. The project will generate power directly into Puerto Rico’s electric grid and provide energy storage benefits necessary for Puerto Rico’s goal of achieving 100% clean energy sources by 2050.
The project also supports President Biden’sJustice40 initiative, which established a goal that 40% of the total benefits from certain federal investments, including LPO funding, flow to underserved communities, including most of Puerto Rico. Puerto Rican residents pay energy costs significantly higher than the U.S. average.
According to the Climate and Economic Justice Screening Tool, the Commonwealth of Puerto Rico, including the communities surrounding the Salinas and Jobos projects, faces some of the highest energy burdens in the United States. The large-scale deployment of solar energy can benefit communities across the island by reducing Puerto Rico’s high energy costs.
As part of the Biden-Harris administration’s efforts to build an equitable and inclusive clean energy future, LPO lenders are also expected to develop and ultimately implement a comprehensive system Community Benefit Plan that ensures meaningful community and labor involvement, improves the well-being of residents and employees, and includes stringent labor standards during construction, operation and throughout the life of the loan guarantee.
The Project Marahu team consists of two community relations managers drawn from the Guayama community and a group of local community engagement advisors. Local union leaders will be engaged for construction and operations planning at both the Jobos and Salinas sites. Through existing facilities in Puerto Rico, AES has forged partnerships with the Institute of Technology and the Polytechnic University of Puerto Rico – both institutions that serve minority populations. AES has also worked with The Trust for the Americas for six years to lead capacity building and entrepreneurship programs for Guayama and Salinas community members and has formalized programs that provide targeted training and career development opportunities for women.
Funding for this project would be through theEnergy Infrastructure Reinvestment Program (EIR). under Title 17 Clean Energy Financing, Section 1706. EIR, established by President Biden’s Inflation Reduction Act, can finance projects that retrofit, repower, repurpose, or replace energy infrastructure that is no longer active, or enable operational energy infrastructure to avoid, reduce, use or retain air. pollutants or greenhouse gas emissions. In support of President Biden’s efforts to support the economic revitalization of energy communities, Project Marahu will help retire and replace coal energy infrastructure with clean energy facilities – creating new jobs while reducing harmful emissions. The Puerto Rico Energy Public Policy Act (Act 17) requires Puerto Rico’s utility to cease all coal-fired power generation by 2028 and transition to a 100% renewable energy mix by 2050.
Today’s announcement is one of many actions DOE has taken to help modernize Puerto Rico’s electric grid and strengthen energy resilience. In December 2022, President Biden authorized $1 billion to establish the Puerto Rico Energy Resilience Fund (PR-ERF), which is administered by DOE’s Grid Deployment Office. The PR-ERF is a separate federal funding source to spur important investments in renewable and resilient energy infrastructure in Puerto Rico. To learn more about how Puerto Rico can achieve a resilient, 100% renewable grid by 2050, read DOE’s Puerto Rico Grid Resilience and Transitions to 100% Renewable Energy Study (PR100).
While thisconditional commitmentindicates DOE’s intent to finance the project, DOE and the Company must meet certain technical, legal, environmental, and financial conditions before the Department enters into final financing documents and approves loan guarantee financing.
News release from the DOE’s Loan Programs Office