Energy in Puerto Rico
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Energy in Puerto Rico primarily relies on imported fossil fuels, leading to high electricity costs and vulnerability to natural disasters. The island’s centralized grid has struggled with reliability, with such hurricanes as Maria (2017) and Fiona (2022) causing prolonged blackouts. While Puerto Rico plans to transition to 100% renewable energy by 2050, progress has been slow. Renewables account for only 6% of electricity generation as of 2022.
Historically, Puerto Rico’s energy sector evolved from private companies to government control under the Puerto Rico Electric Power Authority (PREPA). The 2017 hurricanes exposed the grid’s fragility, prompting increased federal involvement and a shift toward modernization. In 2021, LUMA Energy took over transmission and distribution.
Efforts to improve energy security include renewable energy investments, grid upgrades, and storage solutions. However, financial instability, regulatory delays, and extreme weather continue to challenge Puerto Rico’s transition to a more resilient and sustainable energy system.
History
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Perspective
In recent years, Puerto Rico's energy sector undergone change, notably in modernizing its electric grid and transitioning to green energy.[1] The island has historically relied on imported fossil fuels for energy production, leading to high electricity costs and vulnerability to price fluctuations.[2]
Energy production and distribution in Puerto Rico has switched between private enterprises and government-controlled entities as the island tries to transition from fossil fuels to renewable energy sources.[3][4]
Early years
The first electric lighting system in Puerto Rico was installed in March 1893 by José Ramón Figueroa y Rivera in Villalba.[5][6] Later that year, the Sociedad Anónima de Luz Eléctrica (SALE) established the first electric lighting system in Puerto Rico's capital San Juan.[5] Between 1893 and 1915, private companies and foreign investment drove the expansion of electrical service, particularly from Canadian investors who controlled the Puerto Rico Railway Light and Power Co.[5]
By 1924, 83% of the island’s residents had electricity in their homes. In 1908, the Legislative Assembly passed the Irrigation Act, which built government-owned hydroelectric plants.[5] In 1915, the government began developing its own energy infrastructure, using reservoirs created for irrigation projects to generate and distribute electricity to the island. The Carite 1 plant became the first government-owned hydroelectric facility in Puerto Rico.[7]
In 1941, the River Sources Authority was created, consolidating the responsibilities of the Water Resources Use office and the Puerto Rico Irrigation Service Administration.[7] The rapid industrialization of the 1950s increased electricity demand, necessitating a shift away from exclusive reliance on hydroelectric power.[8][5]
By 1979, oil and its derivatives accounted for 98% of Puerto Rico’s electricity generation, with hydroelectric sources contributing the remaining 2%.[7] That same year, the River Sources Authority was renamed the Puerto Rico Electric Power Authority (PREPA),[7] an agency that is still active today.
1980s-1990s
During the 1980s, the energy sector significantly changed. In 1980, Puerto Rico switched from gallons to liters as units for gasoline sales, due to gas prices in the U.S. going over a dollar per gallon. Electricity consumption dipped to its lowest levels in 1982, reaching 10.34 billion kilowatt-hours.[9] This was influenced by global economic challenges and oil price instability following the 1970s energy crises. That same year, the Puerto Rico Electric Power Authority Act was amended on May 12 by Act No. 46, as part of a series of legislative changes to the original 1941 law.[10]
Electricity consumption increased throughout the 1990s as economic development and industrialization progressed, driving demand for household appliances and air conditioning.[9] During this time, consumption of gasoline went down, reaching its lowest point at 19.94 thousand barrels per day in 1999.[11]
2000s to present
Puerto Rico’s energy consumption reached record highs in the early 2000s. Gasoline use climbed to 83,000 barrels per day in 2003, a fourfold increase from 1999.[11] Electricity consumption also peaked at 23.47 billion kilowatt-hours in 2006.[9]
At the federal level, the National Energy Policy Development Group, under President George W. Bush, introduced policies in 2001 that included provisions for Puerto Rico, emphasizing energy diversification and renewables.[12]
During the 2010s, problems and challenges in Puerto Rico’s gained the attention of the U.S. In 2011, the President’s Task Force recommended implementing renewable energy and efficiency, as well as proposing a feasibility study for an electrical connection with the U.S. Virgin Islands. The task force also recommended restructuring Puerto Rico’s energy regulations.[13]
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In 2017, Hurricanes Irma and Maria devastated Puerto Rico’s electrical grid, causing one of the longest blackouts in U.S. history. Some areas of the island were without power for almost a year. The crisis exposed vulnerabilities in the island’s centralized, fossil fuel-based system. In response, the U.S. Department of Energy and its national laboratories helped with grid resilience technical support.[14]
In 2019, Puerto Rico passed the Energy Public Policy Act (Act 17), committing to 100% renewable electricity by 2050, with interim targets of 40% by 2025 and 60% by 2040. The law also mandated phasing out coal by 2028 and improving energy efficiency by 30% by 2040.[14]
Despite these goals, Puerto Rico’s transition to renewable energy has been slow. In 2022, petroleum-powered plants still accounted for 63% of electricity generation, followed by natural gas (23%), coal (8%), and renewables (6%). The island also faced some of the highest electricity prices in the U.S., second only to Hawaii.[15]
After suffering the destruction from Hurricane Fiona in 2022, modernizing the grid became a priority for the island.[14] By 2023, gasoline consumption had declined to 31.66 thousand barrels per day, and electricity use fell to 18.67 billion kilowatt-hours, due to economic factors, population decline, and efficiency improvements.[11]
In 2025, a new energy policy debate emerged when the governor proposed repealing the 2019 renewable energy targets and extending the operation of the island’s coal plant. The proposal sparked opposition from environmentalists and health officials, citing concerns about pollution and high asthma rates.[16]
PREPA issues
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Puerto Rico’s energy system has faced long-standing challenges, including decades of underinvestment, aging infrastructure, and the effects of natural disasters. The Puerto Rico Electric Power Authority (PREPA), the publicly owned utility, has struggled to maintain and modernize the grid, which relies on outdated power plants and substations. Prior to Hurricane Maria in 2017, the system was already in poor condition.[17]
When Hurricane Maria, a Category 4 storm, struck in September 2017, it caused widespread destruction and led to the longest blackout in U.S. history, with some areas experiencing outages for nearly a year.[18] The disaster highlighted the system’s vulnerability, which was the result of systemic neglect rather than the hurricane alone. Failures in one part of the grid could lead to cascading outages.[17]
PREPA has also faced allegations of corruption and financial mismanagement. After the hurricane, Congress investigated claims that officials had accepted bribes.[17] Poor financial decisions, including deferred maintenance and attempts to cover budget gaps, contributed to the utility’s growing debt. These issues were part of the broader financial crisis that led Puerto Rico to declare bankruptcy in 2017.[17] PREPA alone owed more than $9 billion, with a proposed bondholder settlement reaching $8.5 billion—an amount a federal oversight board stated was unaffordable for the island.[18]
In response, the oversight board proposed a revised fiscal plan offering creditors $2.6 billion, avoiding rate increases due to already high electricity costs and the fragile grid.[18] The board’s executive director, Robert Mujica Jr., said that revenue should be used to strengthen the energy system, and that meeting the $12 billion demand from bondholders could require an increase in electricity rates that residents could not afford.[18]
A 2019 law set a target for Puerto Rico to transition to 100% renewable energy by 2050, but progress has been slow due to various obstacles. LUMA Energy, a private company from the U.S. and Canada, assumed control of transmission and distribution in 2021. The company has faced criticism over ongoing outages and high bills, though many of the system’s problems predate its involvement. LUMA officials have stated that modernizing the grid will take time and that they are committed to increasing renewable energy integration.[17]
LUMA Energy takeover
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On June 1, 2021, LUMA Energy took over the operation of Puerto Rico’s electric grid under a public-private partnership aimed at reducing costs, improving resilience, and expanding renewable energy.[19] LUMA, a joint venture between Quanta Services, Inc. and Canadian Utilities Limited, assumed responsibility for the transmission and distribution system from the Puerto Rico Electric Power Authority (PREPA), which retained ownership of the assets.[20]
The 15-year contract will officially begin once PREPA exits Title III bankruptcy. LUMA does not own the grid infrastructure or power generation assets.[20]
Hurricane Maria caused $9.7 billion in damage in Puerto Rico, prompting LUMA to make permanent repairs to the island's electrical grid. Additional damage from Hurricane Fiona (2022) and Tropical Storm Ernesto (August 2024) further strained the system, contributing to outages such as one in mid-June 2024.[21]
Efforts to remove LUMA Energy
In April 2022, the Puerto Rico House of Representatives voted 29–16, with one abstention, to terminate the commonwealth’s contract with LUMA Energy following a prolonged blackout. Opposition to the measure came from members of the pro-statehood New Progressive Party.[22] Governor Pedro Pierluisi opposed terminating the contract early, preferring to wait for the results of a Puerto Rico Energy Bureau investigation into the outage.[22]
The criteria for terminating the contract are expected to take effect only after the Puerto Rico Electric Power Authority (PREPA) restructures its debt and the 15-year contract formally begins. PREPA has been in bankruptcy for seven years, with negotiations between the Fiscal Control Board and unsecured bondholders having been scheduled for September 2024.[23]
Current energy landscape
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Puerto Rico relies primarily on imported fossil fuels for electricity generation. As of 2022, petroleum-fired power plants accounted for 63% of the island’s electricity capacity, followed by natural gas (23%), coal (8%), and renewables (6%). This dependence contributes to Puerto Rico having some of the highest electricity prices in the U.S., second only to Hawaii.[15]
Petroleum products make up about 60% of Puerto Rico’s total energy consumption, though per capita use is roughly half the U.S. average. Coal generates about 16% of the island’s electricity, but plans are in place to phase out coal-fired power by 2028 as part of Puerto Rico’s transition toward cleaner energy sources.[15]
Puerto Rico’s electrical infrastructure has faced decades of underinvestment and deterioration. These weaknesses were exposed when Hurricane Maria struck in 2017, causing the longest blackout in U.S. history and necessitating a large-scale grid reconstruction.[24] PREPA had run the island's electricity production and distribution at the time, with LUMA taking over on June 1, 2021.[20]
Reliability issues persist, with over 100 load shed events recorded in 2024 due to insufficient or unexpected generation failures.[25] Additionally, vegetation interference is responsible for more than half of the island’s service interruptions.[26]
Energy infrastructure
LUMA launched Puerto Rico’s Vegetation Clearing Initiative in September 2023, aiming to clear over 16,000 miles of powerlines, substations, and telecom sites within three years. This effort builds on the 3,300 miles already cleared since 2021. The initiative is projected to improve reliability by 15% in the first year and reduce outages by 35-45% by 2026, with 5,700 miles scheduled for clearance in the first year, 6,900 miles in 2025, and the remainder by the end of 2026.[26]
As of January 2025, LUMA began upgrading more than 23 substations across Puerto Rico with a $620 million investment, benefiting over 650,000 customers. The Substation Modernization Initiative involves replacing key equipment and redesigning systems to improve reliability and resilience against storms. So far, eight transformers have been replaced at substations in Hato Rey, Bayamón, Río Piedras, San Juan, Trujillo Alto, Santa Isabel, and Aguada.[27]
Renewable energy
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Puerto Rico has committed to transition to renewable energy, with a goal to meet 100% of its electricity needs with renewable energy by 2050.[28][29][30] This transition is set by law in the Puerto Rico Energy Public Policy Act (Act 17), which sets interim targets of 40% renewable energy by 2025 and 60% by 2040.[29][30]
Current projects and investments
In February 2025, LUMA Energy announced plans to add nearly 1 GW of renewable energy and over 700 MW of energy storage to reduce fossil fuel dependence and improve grid reliability. The $4 billion private investment is expected to generate over 4,200 construction jobs and 139 permanent positions.[25]
LUMA’s agreement with Linxon US and AtkinsRéalis Caribe includes developing nine “energy interconnection points” as part of Puerto Rico’s Tranche 1 transition to renewables. The project aims to lower costs for consumers by reducing reliance on fossil fuels and minimizing power outages.[25]
Integrated Resource Plan
In November 2024, LUMA submitted a resource plan to the Puerto Rico Energy Bureau, outlining strategies for the island’s energy needs over the next 20 years. The filing included four of ten possible scenarios considering factors such as demand growth, fuel prices, and infrastructure costs.[31]
LUMA emphasized that the IRP is a broader Puerto Rico initiative rather than a company-specific plan, framing its role as a facilitator in long-term energy planning.[31]
See also
References
External links
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