Renewable energy deal discussions centered on projects in Puerto
Rico have been difficult – particularly for project owners
– over the past few years. The foundations of most of the
projects on the island were power purchase agreements (PPAs) with
PREPA, the utility which, as an organ of the government was capable
of issuing its own bonds and faced the same credit issues as the
island itself. Therefore most projects have teetered along on life
support for some time as financiers were unwilling to even open
discussions with such a poor credit offtaker in the mix. However,
interest in the island seems to have been heating up lately.
Proposals for behind-the-meter projects with private offtakers
and wheeling scenarios have been popping up. Even old PREPA deals,
many of which had died slow deaths in the wake of missed debt
payments, may be in the process of resurrection. Why? Some may have
missed it during the dog days of summer, but the main reason is the
passage of PROMESA – the Puerto Rico Oversight, Management
and Economic Stability Act. Among other things, the
legislation: 1) created a fiscal control board;
2) granted the control board the power to force a debt
restructuring; and, 3) allowed for the minimum wage to be
The Democrats on the
Obama-appointed board are: Arthur Gonzalez, a senior fellow at New
York University's School of Law; Jose Ramon Gonzalez, president
and chief executive officer of the Federal Home Loan Bank of New
York; and Anna Matosantos, a financial and budget consultant at the
Public Policy Institute of California. The Republicans are:
Carlos Garcia, founder and chief executive officer of Bay Boston, a
minority owned private equity firm; Andrew Biggs, a resident
scholar at the American Enterprise Institute; and David Skeel, a
University of Pennsylvania law professor; and Jose Carrion III.
While many – including some lawmakers who voted on the
bill – have criticized PROMESA, and while it does not
directly address solar deals on the island, it has seemingly given
the island – and the solar industry along with it – a
lifeline. If it hasn't already, don't be surprised if
Puerto Rico shows back up on your radar very soon . . . .
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