U.S. Energy Department Announces $861 Million Loan Guarantee for Solar, Battery Projects in Puerto Rico

The U.S. Energy Department on Oct. 15 announced a $861.3 million loan guarantee to build two solar-plus-storage facilities and two standalone battery storage systems in Puerto Rico. These facilities, collectively called Project Marahu, would add up to 200 megawatts (MW) of solar PV capacity and 285 MW of battery energy capacity to the island’s grid.

Project Marahu will be led by Clean Flexible Energy LLC, an indirect subsidiary of The AES Corporation and TotalEnergies Holdings USA Inc. The project, to be located in the municipalities of Guyama and Salinas, is expected to deliver around 460,000 MWh of energy to power over 43,000 households in Puerto Rico. The initiative will support the island’s clean energy goals. The Puerto Rico Energy Public Policy Act requires the island’s utility to cease all coal-based power generation by 2028 and transition to a 100 percent renewable energy mix by 2050. The project, which is expected to replace fossil fuel-based facilities, has the potential to reduce almost 2.7 million tons of carbon dioxide annually.

Administered via the Loan Programs Office, the loan guarantee is made possible through the Energy Infrastructure Reinvestment, or EIR, program established by the 2022 Inflation Reduction Act. The program intends to repurpose, retool, replace, or repower redundant energy infrastructure to avoid, utilize, or reduce air pollutants like carbon dioxide.

The standalone battery systems are crucial for the island ensure a reliable power supply even at times of harsh weather. In the past, Puerto Rico’s power grid struggled to recover from adverse weather conditions like hurricanes. In September 2017, Hurricane Maria destroyed nearly 80 percent of Puerto Rico’s electricity generation capability. The island’s electricity generation took almost a year to recover from the impacts of the hurricane. Hence, grid resiliency has always been a top priority for Puerto Rico.

The latest loan guarantee is the latest in a series actions to aid Puerto Rico’s clean energy transition and grid resiliency. In April 2023, the department announced a $3 billion partial loan guarantee to Sunnova Energy Corporations Project Hestia to finance rooftop solar, battery storage, and virtual power plant, or VPP, ready software.

In December 2022, President Biden signed the 2023 Consolidated Appropriations Act, which allocated $1 billion for the PR-ERF to finance investments in renewable energy projects and energy infrastructure. Puerto Rico could install up to 3,000 solar and battery storage systems in low-income households using ERF funds, according to the department.