What Puerto Rico Needs
WASHINGTON, DC – President Donald Trump and the US Congress are coming under mounting pressure to increase assistance to Puerto Rico. The devastation caused there last week by Hurricane Maria has only exacerbated severe longer-term problems resulting from deferred maintenance on the island’s critical infrastructure. Puerto Rico needs more than short-term assistance (although this is also urgent); it needs bipartisan support to rebuild, with an initial and essential focus on a more robust and cheaper supply of electricity.
The existing electricity grid has substantially collapsed, with the Federal Emergency Management Administration (FEMA) estimating that up to 90% of the transmission system may have been destroyed by the hurricane. A major dam is at risk. Damage to the air traffic control infrastructure has severely limited flights to and from the island. As Governor Ricardo Rosselló has stated publicly, there is now a real risk of a major humanitarian disaster. Donations are flowing in, but the total will be small relative to what is needed.
The Trump administration says that FEMA is working hard and effectively. Let’s hope they are right. There will be a lot of questions about whether Puerto Rico’s roughly 3.4 million US citizens receive the same support as Texas and Florida (and other parts of the 50 states) when natural disaster strikes. But the bigger question is this: What will be done – and by whom – to help Puerto Rico really recover?
Puerto Rico – a dependent territory of the US – needs major investment in its essential infrastructure to bring it at least to the level of the 50 states. After the humanitarian situation is stabilized, policymakers should focus on providing Puerto Rico with stable, reliable, and cost-effective electric power, generated primarily by renewables and distributed over a smart, resilient grid. Ensuring energy availability will be indispensable for stability and sustained economic growth.
Merely propping up aging infrastructure will not be effective. Cheaper and more resilient electricity benefits everyone – from the sidewalk vendor to the most sophisticated pharmaceutical operation. And all the technology needed to provide it is available in the US today.
Ironically, the Puerto Rico Electric Power Authority (PREPA), the bankrupt incumbent energy provider, has been effective primarily in building its own competition. Electricity prices on the island are higher than anywhere else in the US (except Hawaii), and service is unreliable. As a result, an ever-growing number of customers have shunned PREPA’s offerings, relying instead on their own diesel-powered generators.
Noel Zamot, who serves as Revitalization Coordinator under the Financial Oversight and Management Board for Puerto Rico, has suggested that a smart, resilient grid would be designed from the ground up, and would rely on distributed generation to mitigate the impact of future natural disasters or human attacks. Smaller, more agile power-generation units would be linked to a sophisticated monitoring and control system to ensure immediate startup and generation following outages.
Moreover, at least 50% of all energy could come from renewables (solar, wind, tidal, and more), including through the use of advanced storage technologies, some of which are currently under development. The bulk of long-haul transmission lines would be shielded or buried, and an information strategy that deploys sensors appropriately would detect losses, whatever their source.
Such a grid would stabilize costs for existing businesses, likely reducing the single biggest cost for most small and medium-size enterprises. And it would create conditions for truly innovative future scenarios. Imagine Puerto Rico becoming the electric vehicle capital of the world, with well-apportioned recharging stations, near-zero emissions, and car sharing for the tourism sector. Puerto Rico could even become an energy exporter, supplying excess capacity to nearby neighbors in the US and British Virgin Islands.
All of this (with the exception of large-scale storage for renewables) is achievable with existing technology. The key issues are strategic, organizational, and regulatory. With government support, and an understanding of the proper governance structure and processes for effective regulation, this vision could be executed within the coming decade. And building this grid would generate plenty of good jobs.
The federal government’s role should be to make Puerto Rico a hub for investing in clean, renewable energy that is resilient to weather shocks. New technology that results from this investment could be commercialized and sold to a world that is struggling to adapt to climate change and extreme weather.
The Trump administration would have trouble passing such a package of long-run investment through Congress with only Republican support; various ideological objections would no doubt be raised. But this is a perfect opportunity for Trump to reach out to the Democrats, and to demonstrate that both sides can cooperate on rebuilding and updating essential national infrastructure.
Simon Johnson is a professor at MIT’s Sloan School of Management and the co-author of White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.
By Simon Johnson