Borrego Solar Expands in Puerto Rico as Island Extends Subsidies

Borrego Solar Systems Inc. is developing its first utility-scale solar-power plants in Puerto Rico as the island extends subsidies for renewable energy.

Borrego plans to complete two projects of 2.3 megawatts and 1.2 megawatts within a year and start building a 20-megawatt plant in 2014, said Alex Sarly, senior project developer at the San Diego-based company. It has funding for all its photovoltaic ventures on the island with a group of U.S. banks, he said.

Puerto Rico, a U.S. territory that also offers tax breaks for clean-energy projects, already operates one of the five largest solar parks in Latin America. Borrego is set to benefit from an extension of the island’s net metering policy, which credits generators for any power produced that’s not used.

“There’s very strong potential for solar here in Puerto Rico for a number of reasons, not least the new net metering rules,” Sarly said by telephone. “It also benefits from a very high cost of power, which is a function of it being an island grid with about 70 percent of generation from oil.”

New regulations extend the metering system to solar plants of as much as 5 megawatts, compared with a previous 1-megawatt limit, according to Sarly. Such plants can also apply for local cash grants covering as much as 50 percent of project costs.

The extension opens up the policy to utility-scale plants, which have a capacity of at least 1 megawatt.

Utility Scale

Utility-scale solar parks that exceed the 5-megawatt threshold benefit from power-purchase agreements awarded by the Puerto Rico Power Authority. The state-owned utility has granted PPAs to 18 sites with almost 500 megawatts in capacity, including Borrego’s largest project, offering 15 cents a kilowatt-hour for their output over 20 years.

Puerto Rico has the largest solar park operating in Latin America outside Peru, according to Bloomberg New Energy Finance. The 20-megawatt plant was completed by AES Solar Energy Ltd. in October for $96 million, BNEF data show.

While the biggest solar parks in Puerto Rico benefit from PPAs and tax credits, they still face “significant” challenges, according to Sarly, who cited electricity-storage requirements.

Plants must be able to store a certain quantity of their output to allay concern that intermittent renewable-power sources may destabilize the grid. The cost of meeting these requirements may be “quite prohibitive” and increase budgets by more than 15 percent, Sarly said.

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