Regulator cancels Tranche 3 RFP due to ‘unreasonably high costs’
By The Star Staff
The Puerto Rico Energy Bureau (PREB) has opened up a new tender for renewable energy projects after canceling the Tranche 3 tender, arguing that the prices offered were not in the public’s interest.
The new Tranche 4 tender, made public Thursday, seeks 500 megawatts (MW) of renewable energy and 250 MW of battery energy storage. The deadline to submit bids is Nov. 25.
The decision to cancel the Tranche 3 tender was made because of the high prices offered by proponents. The Tranche 3 tender procured about 1,000 MW of energy and at least 500 MW (2,000 MWh) of energy storage.
“Based on the prices for renewable energy and energy storage resources received in the early stages of the Tranche 3 Request for Proposal (RFP), the Energy Bureau concluded that it is not in the public interest to invest further time, money, and resources in conducting studies for projects that will generate unreasonably high costs,” the PREB said in a statement. “Therefore, in the best interest of consumers, it recommended rejecting all proposals and terminating the Tranche 3 RFP.”
The PREB ordered Acción Group, the independent coordinator the entity had hired to manage the tenders, to launch the fourth of a total of six proposed RFPs for new renewable energy and energy storage projects.
“In doing so, Acción Group will implement new strategies within the RFP process to ensure a more accelerated schedule, facilitating the fastest possible implementation of approved projects,” the energy regulator said.
According to an order presented by the PREB, Acción Group submitted a memorandum to the PREB detailing the initial prices per technology received for the Tranche 3 RFP.
The selection committee appointed by the PREB to select project proponents submitted a report to the PREB stating that the initial pricing observed for solar photovoltaic projects in the Tranche 3 RFP, excluding interconnection costs, exceeded the base price levels considered previously reasonable during their evaluation of the Tranche 2 RFP, and that the Tranche 3 RFP was unlikely to result in acceptable pricing, according to a PREB document.
“They advised that the time and resources required to proceed with the interconnection studies may not be justified,” the PREB said. “Essentially, they suggested that the Tranche 3 RFP should not proceed further and, therefore, requested guidance from the Energy Bureau.”
The companies that participated in the Tranche 3 tender 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 approval of several laws ordering the island to draw all of its energy from renewable sources by 2050 and the approval of an Integrated Resource Plan, the Puerto Rico government decided to procure some 3,750 MW of renewable energy and 1,500 MW of energy storage resources over three years in a series of six tranches.
Those tenders have suffered numerous delays.
Tranche 1, which was launched in February 2021, had trouble closing contracts with the Puerto Rico Electric Power Authority (PREPA) because the selected service providers sought amendments to contract terms to adjust for inflation and pricing changes.
“In the course of amending the contracts under the Tranche 1 RFP, the prices increased by an average of 34% over the original contract prices,” the PREB wrote. “Furthermore, some prices exceeded the higher end of the price ranges shown in industry-standard financial analysis reports on energy pricing.”
The PREB and PREPA approved the selection of three proponents for the Tranche 2 tender earlier this year.
Comments