The Puerto Rico Energy Bureau (NEPR, in Spanish) approved on Friday, by resolution, the petition of Genera PR to gasify units #3 and #4 of the Palo Seco power plant in Toa Baja, a determination that, according to the government, will allow progress in the modernization of the electric system.

The resolution authorizes the company in charge of the generator fleet to submit to the Central Office of Recovery, Reconstruction and Resiliency and the Federal Emergency Management Agency the scope of the project to convert both units to a dual-fuel system.

In short, the units would operate with natural gas as the main fuel and bunker C-a derivative of the oil they currently burn-would remain as a backup.

Palo Seco units #3 and #4 are the main units at the plant, with a capacity of 216 megawatts each. Both began commercial operations between 1967 and 1968.

This Saturday, reacting to the determination, Governor Jenniffer González, along with the Energy Czar and executive director of the Public-Private Partnerships Authority, Josué Colón, highlighted that the conversion will generate savings of $40.6 million, which will be directed to reduce consumption bills.

“With this conversion, we are once again fulfilling our commitment to build a more reliable, modern and efficient energy system, which will also produce tangible and significant savings for the people of Puerto Rico,” González said in a press release.

According to the governor, the approval of the NEPR also allows the use of federal funds to carry out the work and thus not entail an additional cost to the citizens.

“These units represent an additional amount of generation that will now be able to operate in a more cost-effective manner. This project is part of the ongoing effort to rebuild and modernize the base generation of the electric system so that we can meet both current and future energy needs," Gonzalez added.

Colón explained that the conversion is an important step, considering that both units were designed and built in the 1960s.

“This process of unit conversions to primary use of natural gas allows us to transform the generation system to a more modern and cost-effective one, using a cleaner, less polluting and cheaper fuel than residual n.6 (oil),” he said.

He argued that, in addition to the economic benefits, “this conversion will also allow a significant reduction in pollutant emissions, including sulfur dioxide (SO2), contributing to improve air quality”. The San Juan area, which includes Palo Seco and other bordering towns, is considered by the Federal Environmental Protection Agency to be in “nonattainment” with SO2 standards.

In celebrating the approval of the NEPR, the administration recalled that energy policy is one of its priorities, and noted that the first law signed by González was aimed at that issue. The Law 1-2025 provides that “there is no higher priority for a government than ensuring for its citizenry energy security and stability through an electric infrastructure and system that is modern, reliable, resilient and cost effective.”

For his part, José Ortiz, former executive director of the Puerto Rico Electric Power Authority (AEE, in Spanish), told El Nuevo Día that switching to natural gas can offer greater stability compared to bunker C and diesel.

“Natural gas is much more stable in terms of price. Here, (gas) is being sourced mainly from Trinidad and Tobago or the United States, which takes it away from the conflict area,” Ortiz said, noting that volatility in oil markets could put upward pressure on cost.

He added that the use of natural gas could help reduce emissions in the San Juan and Cataño area, identified as “non-attainment”.

He also explained that natural gas combustion requires less maintenance. “When you use natural gas, there is much less maintenance you have to do on the machine, and that helps because they are very old machines,” he said.

According to Ortiz, the next step for the electricity system should be to replace these units with more modern and efficient plants that take advantage of the natural gas supply available on the island.

Beyond the government’s endorsement, the documents submitted by Genera PR to the NEPR detail the recent performance of the units, the scope of the conversion and the operational changes of the project.

According to the information, Palo Seco unit #3 recorded an approximate annual capacity factor of 23% in fiscal year 2023-2024, 69.9% in 2024-2025 and 60.1% in 2025-2026 through December 2025. In the case of unit #4, the factor was 7.5% in 2023-2024, 0% in 2024-2025 and 21.9% in 2025-2026 through December.

Initially, Genera PR proposed to supply the fuel by means of liquefied natural gas containers transported by trucks. However, it later indicated that it would be delivered through a pipeline from the San Juan plant, in a project led by the Federal Department of Energy and the U.S. Army Corps of Engineers.

According to the resolution, Genera PR established that multiple components and parts necessary for the conversion of the units were already acquired by PREPA. After inspecting them, the company indicated that they appear to be in“good condition and functional”, so it would not be necessary to acquire replacement parts with federal funds.

As for the cost of the project, Genera PR initially estimated an investment of close to $80 million, but later reduced it to about $50 million, after determining that some of the equipment needed for the conversion had already been acquired.

Genera PR also argued that the conversion could significantly extend the useful life of the equipment. According to the company, natural gas combustion produces minimal amounts of ash, lower particulate emissions and much lower levels of sulfur, which in turn reduces deposit formation and corrosion in boilers, turbines and exhaust systems.

The company added that natural gas helps to maintain the thermal efficiency of the units, decrease component wear, reduce lubricating oil contamination and lower the frequency of maintenance and major overhauls, which could translate into greater operational stability and longer equipment life, compared to the use of bunker C.

Genera PR indicated that the project could begin partial operation with natural gas by July 2026, when the units are expected to operate at about 50% with that fuel. It added that full operation with natural gas would be expected by October 2026.

After evaluating the proposal, the NEPR determined that the conversion complies with the applicable regulatory framework and is in the public interest, and approved it.

It clarified, however, that the authorization is limited only to the project presented for both units, so any modification must have its approval. It also stressed that the determination does not constitute an authorization for similar initiatives in other Genera PR plants or projects.

The NEPR also warned that failure to comply with the resolution, regulations or applicable laws could lead to administrative fines of up to $125,000 per day, which could increase - in cases of recidivism - to between $15,000 and $250,000, at the regulator’s discretion.

The conversion to natural gas in plants designed for bunker C has already been carried out in Puerto Rico in units #5 and #6 of the Costa Sur plant, in Guayanilla, at the beginning of the 2010s. In January, the NEPR gave way, after a process that lasted more than a year, to the conversion from diesel to natural gas of three mega-generators in Palo Seco.

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This content was translated from Spanish to English using artificial intelligence and was reviewed by an editor before being published.