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The loan guarantee, provided by the U.S. Department of Energy (DOE), is intended to finance a Convergent Energy and Power solar system with integrated battery energy storage and three independent energy storage projects throughout Puerto Rico.
The U.S. Department of Energy (DOE) Office of Loan Programs announced a conditional commitment for a loan guarantee of up to $559.4 million to affiliates of Convergent Energy and Power Inc, an energy storage provider. The loan guarantee is intended to finance one solar system with an integrated battery energy storage system (BESS) and three stand-alone BESS projects throughout Puerto Rico.
The loan guarantee amounts to $584.5 million, of which $559.4 million is principal and $25.1 million is capitalized interest.
The island of Puerto Rico has been ravaged by hurricanes, most recently Hurricane Ernesto in August, which knocked out power to half the island. Converged energy storage systems are expected to improve the resilience of Puerto Rico’s grid, reduce the need for fossil fuel generation and lower energy costs.
“Improving grid reliability and sustainability in Puerto Rico is critical. We applaud the Department of Energy for recognizing Convergent Energy and Power’s track record of expertise in the solar and energy storage sectors through this conditional commitment from the U.S. Department of Energy’s Office of Loan Programs,” said Frank Genova, CFO and co-founder of Convergent. “We look forward to contributing to the modernization of Puerto Rico’s electric grid and advancing its clean energy goals.”
The project will include the installation of a solar-plus-storage system in Coamo. The 100 MW solar system will be combined with a 55 MW, 55 MWh battery storage system. Three additional utility-scale battery storage systems are planned for the municipalities of Caguas, Peñuelas, and Ponce. These systems are expected to generate power directly to the Puerto Rico grid.
Additionally, the projects will allow Puerto Rico to advance in meeting its clean energy and climate policy goals. The Puerto Rico Energy Public Policy Act (Act 17) requires the Puerto Rico Electric Power Authority (PREPA) to stop generating energy from coal by 2028 and move to a 100% renewable energy mix by 2050.
In addition to increasing resilience and helping meet clean energy goals, these systems are expected to help avoid around 2.5 million tons of carbon dioxide equivalent emissions per year by reducing the need to operate fossil fuel-fired generation.
Conditional loan
As with all contingent loans from the Office of Loan Programs, Convergent must develop a comprehensive Community Benefits Plan that ensures engagement with the community and local workforce, maintains strict labor standards, and more. Convergent reports that it is evaluating potential labor agreements in support of the project and hopes to establish apprenticeship programs to train local workers to perform at least 15% of the total work hours.
This conditional loan follows several actions taken by DOE to help strengthen Puerto Rico’s electric grid. In December 2022, President Joe Biden authorized $1 billion for the establishment of the Puerto Rico Energy Resilience Fund (PR-ERF), administered by DOE’s Office of Grid Deployment. The $1 billion funding package is supporting residential solar and storage projects in Puerto Rico, with the first announced installation including subsidized residential solar and battery storage systems through the PR-ERF’s Solar Access Program.
Puerto Ricos distributed solar capacity reached 842 MW in April this year, while residential storage has reached 1.6 GWh. Wood Mackenzie predicts that over the next ten years more than 90% of the solar energy added in Puerto Rico will be distributed. |
