The U.S. Dept. of Energy (DOE) Loan Programs Office (LPO) announced a conditional commitment for a loan guarantee of up to $861.3 million to 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 deliver 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 agenda to create good-paying, high-quality job opportunities 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 comprises 200 MW of solar PV and up to 285 MW of stand-alone BESS capacity. Annually, the solar PV installations will produce approximately 460,000 MWh of energy, enough to power approximately 43,000 homes, and enhance Puerto Rico’s grid reliability 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.

Battery storage will allow the project to continue to provide energy to residents even during adverse weather conditions. The 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 meet its ambitious clean energy and climate goals.

The project will support the retirement of fossil fuel power plants reliant on imported fuel, increase renewable energy generation and enhance grid resilience. The clean, affordable electricity generated by this project will replace the power produced by Puerto Rico’s diesel and coal plants, eliminating the pollution associated with those plants. The project will generate power directly to Puerto Rico’s grid and provide energy storage benefits necessary for Puerto Rico’s goal of achieving 100% clean energy resources by 2050.

The project also supports President Biden’s Justice40 Initiative, which established the goal that 40% of the overall benefits of certain federal investments, including LPO financing, flow to disadvantaged communities, which includes 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, face some of the greatest energy burdens in the United States. Widescale solar deployment can help 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 borrowers are also expected to develop and ultimately implement a comprehensive Community Benefits Plan that ensures meaningful community and labor engagement, improves the well-being of residents and workers, and incorporates strong labor standards during construction, operations, and throughout the life of the loan guarantee.

The Project Marahu team includes two community relations managers who are from the Guayama community and a group of local community engagement advisors. Local labor leaders will be engaged for the construction and operations planning at both the Jobos and Salinas sites. AES, through existing facilities operating in Puerto Rico, has forged partnerships with the Technological Institute and the Polytechnic University of Puerto Rico — both of which are minority-serving institutions. AES has also worked with The Trust for the Americas to lead capacity-building and entrepreneurship programs for Guayama and Salinas community members for six years and has formalized programs offering targeted training and career development opportunities for women.

The financing for this project would be through the Energy Infrastructure Reinvestment (EIR) program under Title 17 Clean Energy Financing Section 1706. Created by President Biden’s Inflation Reduction Act, EIR can finance projects that retool, repower, repurpose or replace energy infrastructure that has ceased operations or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions. In support of President Biden’s efforts to support economic revitalization in energy communities, Project Marahu will assist in retiring and replacing coal energy infrastructure with clean energy facilities — creating new job opportunities while lowering harmful emissions. The Puerto Rico Energy Public Policy Act (Act 17) requires Puerto Rico’s utility to cease all coal-fired energy generation by 2028 and shift to a 100% renewable energy mix by 2050.

Today’s announcement is one of many actions DOE has taken to help strengthen Puerto Rico’s grid modernization and energy resiliency. In December 2022, President Biden authorized $1 billion for the establishment of 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 drive key investments in renewable and resilient energy infrastructure in Puerto Rico. For more information on how Puerto Rico can attain a resilient, 100% renewable grid by 2050, read DOE’s Puerto Rico Grid Resilience and Transitions to 100% Renewable Energy Study (PR100).

While this conditional commitment indicates DOE’s intent to finance the project, DOE and the company must satisfy certain technical, legal, environmental and financial conditions before the Department enters into definitive financing documents and authorizes the funding of the loan guarantee.

News item from the DOE’s Loan Programs Office