Puerto Rico’s P3 Authority in Landmark Agreement With Energiza for Construction and Operation of LNG to H2 Combined Cycle Generation Plant

Cleary Gottlieb advised the Puerto Rico Public-Private Partnerships Authority (P3 Authority) in a landmark transaction intended to continue the transformation of Puerto Rico’s electric sector.

The firm advised the P3 Authority in the successful procurement and entry into a 30-year power purchase and operating agreement (PPOA) between Energiza LLC (Energiza) and the Puerto Rico Electric Power Authority (PREPA) pursuant to which Energiza will develop, design, finance, permit, construct, install, test, and commission a new combined-cycle generating facility (LNG to H2 Generation Facility) with multiple fuel capabilities, including green hydrogen fuel capability. Energiza is a Puerto Rico company wholly owned by Tropigas de Puerto Rico (Tropigas) and Cratos Project Services PR LLC (Cratos).

The PPOA with Energiza, announced by the P3 Authority on December 20, 2024, is the culmination of an extensive and competitive procurement process that spanned over 17 months, which involved eight proponents and represents a historic milestone in the government of Puerto Rico’s objective of providing modern, affordable, resilient, and reliable power to the island, which will help serve as a driver of economic recovery and growth. A new LNG to H2 Generation Facility that is multi-fuel capable – with the ability to run primarily on natural gas and ultra-low sulfur diesel (as backup fuel), and transition to 100% green hydrogen in the future – will significantly contribute to the reliability and resiliency of Puerto Rico’s electric grid, the diversification of energy sources, and the reduction of cost and reliance on fossil fuels. Previously, Cleary represented the P3 Authority in the successful procurement and entry into a 10-year operation and maintenance agreement (O&M agreement) between Genera PR LLC (Genera), the P3 Authority, and PREPA, whereby Genera manages certain legacy generation assets.

Since fall 2018, Cleary has represented the P3 Authority, which is tasked with leading the transformation of PREPA, Puerto Rico’s vertically integrated electric service provider. PREPA is one of the largest public electric utility providers in the U.S. by customers served, with approximately 1.5 million customers. Cleary assists the P3 Authority in pursuing a multipronged strategy to rebuild the island’s energy system utilizing PPPs, which began with the T&D system and the legacy generation assets and will continue with the construction and operation of the LNG to H2 Generation Facility.

The LNG to H2 Generation Facility will be the first ever power plant with hydrogen fuel capability to be built and operated in Puerto Rico. In addition to the project being the first of its kind, the introduction of hydrogen in the fuel mix will help significantly reduce the carbon emission intensity as compared to non-hydrogen fuel. While there are several power plants globally that are capable of utilizing a hydrogen and natural gas fuel blend, currently there are few large scale commercially operating power plant that are capable of running on 100% hydrogen fuel.

For more information, please see the press release here.