Regulator annuls Tranche 3 RFP due to ‘excessively high costs’
---
The Puerto Rico Energy Bureau (PREB) has initiated a new solicitation for renewable energy initiatives following the cancellation of the Tranche 3 solicitation, stating that the proposed prices were not in the public’s best interest.
The newly announced Tranche 4 solicitation, released on Thursday, aims for 500 megawatts (MW) of renewable energy alongside 250 MW of battery storage. The bidding deadline is set for November 25.
The choice to cancel the Tranche 3 solicitation stemmed from the high bids submitted by the applicants. The Tranche 3 solicitation aimed to secure around 1,000 MW of energy and a minimum of 500 MW (2,000 MWh) of energy storage.
“Given the prices for renewable energy and energy storage resources received during the early phases of the Tranche 3 Request for Proposal (RFP), the Energy Bureau determined that it is not in the public’s interest to continue investing time, money, and resources into studies for projects that will incur unreasonably high costs,” the PREB stated in a release. “Thus, for the consumers’ benefit, it recommended dismissing all submissions and halting the Tranche 3 RFP.”
The PREB instructed Acción Group, the independent coordinator tasked with overseeing the tenders, to initiate the fourth of six planned RFPs for new renewable energy and energy storage projects.
“In this endeavor, Acción Group will adopt new strategies within the RFP process to guarantee a more expedited schedule, thereby facilitating the swiftest implementation of approved projects,” the energy regulator remarked.
According to a directive issued by the PREB, Acción Group provided a memorandum to the PREB outlining the preliminary prices per technology received for the Tranche 3 RFP.
The selection committee appointed by the PREB to choose project advocates submitted a report indicating that the initial pricing noted for solar photovoltaic projects in the Tranche 3 RFP, excluding interconnection expenses, surpassed the previously deemed reasonable base price levels during their assessment of the Tranche 2 RFP, and that the Tranche 3 RFP was unlikely to yield acceptable pricing, per a PREB document.
“They cautioned that the time and resources necessary for the interconnection studies might not be warranted,” the PREB mentioned. “In essence, they recommended that the Tranche 3 RFP should not advance and, hence, sought guidance from the Energy Bureau.”
The organizations that took part in the Tranche 3 solicitation included Coqui Power, Pattern Energy, Fonroche Energy America, Energle LLC, Peerless Oil and Chemicals Inc., Infinigen, Helios Alternative Energy, Sunnova Energy Corp., and Sunrun Inc.
Following the enactment of several laws mandating the island to obtain all its energy from renewable resources by 2050 and the endorsement of an Integrated Resource Plan, the Puerto Rico government resolved to acquire approximately 3,750 MW of renewable energy and 1,500 MW of energy storage resources over three years through a series of six tranches.
Those solicitations have faced multiple delays.
Tranche 1, which commenced in February 2021, encountered difficulties in finalizing contracts with the Puerto Rico Electric Power Authority (PREPA) as the chosen service providers sought modifications to contract terms to account for inflation and price fluctuations.
“During the amendment process for the contracts under the Tranche 1 RFP, the prices increased by an average of 34% compared to the original contract prices,” the PREB noted. “Additionally, some prices surpassing the upper bounds of the price ranges indicated in industry-standard financial analysis reports on energy pricing.”
The PREB and PREPA approved the selection of three proponents for the Tranche 2 solicitation earlier this year.
