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Puerto Rico Recieves $13B Infrastructure Grant

Friday, October 2, 2020

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Three years after Hurricane Maria destroyed Puerto Rico’s electrical grid, the Trump administration has announced that it will be awarding two of its largest infrastructure grants to the U.S. territory.

The awards have been made available through the Federal Emergency Management Administration.

Damaged Infrastructure

On Sept. 20, 2017, Hurricane Maria rocked Puerto Rico with sustained winds of 155mph. The effects of the Category 5 storm have since been described as one of the most devastating Atlantic natural disasters to affect the area since Hurricane Jeanne in 2004.

In wake of the disaster, the U.S. Federal Highway Administration announced that it would make $40 million available immediately via a “quick release” to help fund rebuilding efforts of various roads and bridges left damaged or destroyed.

The new funds came as President Donald J. Trump issued a waiver regarding the Jones Act, a limitation on foreign shipments to U.S. ports, for the island as efforts to rebuild begin. Aid to residents of the island territory has in many cases been hindered by washed-out bridges and damaged roads.

According to the Federal Highway Administration (FHWA), emergency work immediately required in Puerto Rico included repairs to bridges, guard rails, traffic signal systems and “a variety of damages related to mudslides and flooding.” The money has been allocated via the agency’s Emergency Relief fund.

In December of that same year, Sen. Bernie Sanders (I-Vermont) unveiled a $146 billion plan to rebuild Puerto Rico and the U.S. Virgin Islands. However, in addition to helping thousands rebuild their homes, there was also focus on the territories’ debt and other facets (split up into seven total) that were impeding the islands before the hurricane season.

Building topics included totally rebuilding the power grid—which had almost been completely destroyed and left some communities without power for close to a year—to include more renewable sources of energy, rebuilding the VA hospitals and clinics, rebuilding public schools colleges and childcare facilities, and infrastructure.

By October 2018, Puerto Rico revealed plans for a massive overhaul of its power grid, a $20 billion, 10-year endeavor that would bury power lines, up the use of natural gas and establish a system that could withstand winds of 160 mph.

According to Reuters, the overhaul plan, known as the GridMod plan, will be developed with consideration of input from the federal, local and private sectors. The endeavor is to be funded via both public and private investments.

The Weekly Journal reported that the overhaul is being developed with four key factors in mind:

  • Making things more customer-oriented, so that customers will work more with utility companies;
  • Improving affordability for residents, businesses and industries;
  • Bettering energy infrastructure reliability; and
  • Bettering infrastructure resiliency in light of extreme weather events, along with a focus on sustainability.

Out of the $20 billion earmarked for the work, 60% of the funding will go toward transmission and distribution repairs, with federal funding slated to cover $13 billion of the overall cost. The Puerto Rico government also noted that it would choose a company to overtake Puerto Rico’s Electric Power Authority, which is facing $9 billion in debt.

Another part of the plan that the new owner will have to complete is the establishment of eight microgrids that can each function on their own if one is knocked offline.

In August, the Puerto Rico Energy Bureau approved a five-year plan developed by the Puerto Rico Electric Power Authority, calling for the addition of battery storage and renewable energy. The plan directs the procurement of at least 3.5 GW of solar and 1.36 GW of battery storage by 2025 and instructs the utility to utilize an all-source procurement to speed development of carbon-free resources.

What Now

Last month, the White House Press Secretary issued a statement reporting that the Trump administration would be awarding Puerto Rico almost $13 billion in FEMA infrastructure grants to help rebuild the territory’s electrical grid system and spur recovery of the territory’s education system.

The Bipartisan Budget Act of 2018 included funding for FEMA to support Hurricane Maria response and recovery, as well as language helping FEMA to ensure that Puerto Rico rebuilds its critical lifelines, services and facilities in accordance with current industry standards.

Reported to be the largest obligation ever awarded, the grants exceed the total Public Assistance funding in any single federally-declared disaster other than Hurricanes Katrina and Sandy.

The funding amount is reported to include a federal share of $11.6 billion for the projects.

Of the awarded grants, $9.6 billion is slated to be used by PREPA for the repair and replacement of thousands of miles of transmission and distribution lines, electrical substations, power generation systems, office buildings and other grid improvements.

“The reconstruction of Puerto Rico's grid is necessary to bring the electrical system to the place that Puerto Rico deserves," Efran Paredes Maisonet, interim CEO of the Puerto Rico Electric Power Authority (PREPA), said in a statement. "This will be possible with the great contribution of the federal government through FEMA."

The money will also be used as part of PREPA’s recently approved five-year plan, according to Morten Lund, partner at Stoel Rives LLP and chair of the firm's energy storage initiative.

The remaining $2 billion will be received by the Puerto Rico Department of Education and will focus on restoring school buildings and educational facilities across the island.

Since the devasting storm of Hurricane Maria, the federal government has obligated approximately $26 billion for Puerto Rico’s recovery.

   

Tagged categories: Energy efficiency; Funding; Grants; NA; North America; President Trump; Program/Project Management; Project Management; Upcoming projects

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