Elon Musk Wants to Give Power to Puerto Rico. Will it Cause More Harm Than Good?

Destruction

On September 20, the Category 4 hurricane named Maria made landfall in Puerto Rico. Thirty-four people died, and most of the island's 3.4 million residents struggled to access clean water, food, and medical care in the weeks that followed.

One of the most poignant displays of the island's continued disarray? Now, three weeks after the storm has dissipated, more than 80 percent of the island is still without power. The storm damaged all facets of the power grid — how power is generated, how power is transmitted, and how power is distributed — making the process of repair far more challenging than on neighboring islands, New Scientist reports. Officials estimate that it could take months for citizens to get their electricity back, or even longer.

That is, unless Elon Musk steps in.

Prompted by a Twitter user, on October 5th, Musk noted that Tesla could get involved in restoring the island's power. Notably, this power would be clean and renewable:

Ricardo Rossello, Puerto Rico's governor, promptly responded to Musk's tweet. Rossello tweeted that an initial phone call between the two was promising:

The two men recognized the great potential in the wake of Puerto Rico's destruction. "Although in the short-term the object would be to bring power to the largest number of people, we shouldn't sacrifice this opportunity to have an energy system that is resilient, modern, and can be at cutting edge on the global level," Rossello said in a subsequent press conference.

A Shift In The Business

Neither Rossello nor Musk has provided much detail about what the plan would look like. But on smaller islands, Tesla has installed a microgrid, a distributed network of batteries and solar panels that operates independently of the standard electric grid. The solar panels collect energy when they can; the batteries store that energy for later use.

This kind of distributed system can bring electricity to those residents more quickly than repairing the traditional electrical grid. That's clearly a good thing.

But could the shift away from traditional systems ultimately punish citizens?

Right now, the government-owned corporation Puerto Rico Electric Power Authority (PREPA) supplies power to all of the island. That power is generated primarily through burning petroleum, natural gas, and coal, which is imported. If more individual homes are outfitted with their own sources of power generation, they will become less reliant on PREPA. This trend is happening elsewhere in the United States, too, from New York to Arizona.

This shift could be financially more disruptive than straightforward privatization, in which government-owned utilities (power, waste management, water) are handed to private companies that run each part of the process. That is because privately owned companies are heavily regulated so that they don't jack up prices and take advantage of consumers. But the combination of regulation and competing companies that answer to shareholders who want to turn a profit often means that consumers don't see much difference in how much they pay for power; in some cases, individuals even pay less in privatized systems.

"There have been a lot of studies on the cost of electricity generation for public and private utilities. It makes no difference. There's a wide range of results, with no real pattern as to whether public or private was better [for citizens]," John Donahue, the faculty chair of the Masters of Public Policy at the Harvard Kennedy School of Government, told Futurism.

"As a customer in a privatized system, you can be confident there will be incentives in place," Frank Wolak, an economics professor at Stanford University, told Futurism. But, he notes, there are downsides, too: "If you're working in the privatized system, you won’t do as well. You could lose your job."

To this end, a push towards individualized power generation could come with a similar trade-off for citizens, at least at first: they might pay less for electricity on a monthly basis, but those employed by the power company might lose their jobs.

"Musk’s pitch might be good news for rate payers, bad news for electricity workers. That’s probably the bottom line," Donahue said.

Risky Renewables?

Shifting to the microgrid also comes with new risks that weren't present in the traditional power system. The solar panels and battery packs are expensive; users often need years to recoup their investment. Musk isn't letting on how much he's going to charge for Tesla's systems, or who will be paying for it, but given Puerto Rico's sizable debt, it might be a tough decision if the government uses an outsized portion of its recovery funds to restore power using Tesla's tech.

It's particularly knotty because the island will probably have to rebuild its traditional grid anyway. The batteries that store energy aren't as efficient, and they need to give people access to electricity 24/7, Wolak said. So when the Sun isn't shining, everyone will need backup power from the grid all at the same time. The supply and demand of electricity will fluctuate dramatically, causing a headache for the power company, which will need to generate that power only intermittently and can't loop in to a larger grid due to Puerto Rico's isolation.

"You hear people talk about how Denmark's electricity is 80 percent renewable. But it's interconnected with the rest of Europe. So they can install a lot of wind, but if the wind isn't blowing [Denmark] gets electricity from other regions," Wolak said. The same thing is happening in California, where natural gas powers homes to make up for solar's down time. "Puerto Rico is an island. If there’s no sun or wind, there's no transmission line to Miami."

"[Installing a microgrid] would effectively amount to discarding a lot of capacity that’s already there," Wolak said. "It's not going to be the lowest-cost way to get electricity back up." Moreover, installing a microgrid in a market of this size has never been done, Wolak said. And it's a gamble to see if it will work — a politically palatable one, but a gamble nonetheless. "Everyone loves renewables. But this is not something that we have a proof of concept anywhere," Wolak said. "Maybe it's not the best time to do it for Puerto Rico as it's trying to recover."

We may soon find out if the gamble pays off. Just a week after Musk spoke with Rossello, a shipment of Tesla's Powerpacks was spotted at Puerto Rico's airport.