Elon Musk Is Not the Hero Puerto Rico Needs

The island needs a revamped electric grid and fast, but privatization is not the answer.

Kate Aronoff October 10, 2017

Don't trust the hype around Elon Musk's plans for Puerto Rico. (Mark Brake/Getty Images)

In what might be con­sid­ered the world’s green­est bro­mance, Puer­to Rican Gov. Ricar­do Rossel­lo and clean ener­gy wun­derkind Elon Musk have been exchang­ing kind words on Twit­ter in the last few days. Accord­ing to a tweet from the gov­er­nor late last week, the two are now in talks about bring­ing renew­able ener­gy from Musk’s Tes­la and SolarCi­ty oper­a­tions to the island, whose long-embat­tled pub­lic util­i­ty — the Puer­to Rico Elec­tric Pow­er Author­i­ty (PREPA) — was dec­i­mat­ed by Hur­ri­cane Maria.

Privatization talks picked up after the island’s brush with Irma, and still more voices from outside the island have joined the call for privatization in Maria’s wake.

On Fri­day night, Rossel­lo report­ed a Great ini­tial con­ver­sa­tion with @elonmusk tonight. Teams are now talk­ing; explor­ing oppor­tu­ni­ties. Next steps soon to follow.”

On the one hand, the talks can be seen as a pos­i­tive devel­op­ment: More than 80 per­cent of the island remains with­out pow­er, and the storm could be a once-in-a-life­time oppor­tu­ni­ty for Puer­to Rico to get back online and become a leader in the tran­si­tion away from fos­sil fuels. But the bud­ding friend­ship between Rossel­lo and Musk is also tak­ing place in the con­text of a mas­sive attempt to pri­va­tize Puer­to Rico’s elec­tric util­i­ty. Musk’s com­pa­nies could deliv­er tan­gi­ble improve­ments to Puer­to Rico’s grid, but they could also prime the pump for a cor­po­rate takeover of the Unit­ed States’ largest pub­lic pow­er provider, putting deci­sions like who gets pow­er and how much it costs into the hands of cor­po­rate shareholders.

Beyond ques­tions of own­er­ship, there are logis­ti­cal con­cerns that should cast some doubt on the poten­tial deal. The Tes­la team has done this for many small­er islands around the world,” Musk tweet­ed, it can be done for Puer­to Rico too.” This isn’t exact­ly true. As Slates Eleanor Cum­mins points out, Tesla’s work on the Amer­i­can Samoa island of Ta’u serves less than 1,000 res­i­dents, and sim­i­lar projects have pow­ered oth­er sim­i­lar­ly small islands, lux­u­ry resorts and brew­eries. The pop­u­la­tion of Puer­to Rico is 3.4 mil­lion, and where Ta’u had a most­ly func­tion­al grid before, Puer­to Rico’s has been all but lev­eled by both Maria and decades of disinvestment.

One of Tesla’s largest island pow­er projects — on the also-tiny Hawai­ian island of Kauai, pop­u­la­tion 72,000 — may offer a bet­ter prece­dent. For island util­i­ties, mak­ing the switch to solar and wind makes even more eco­nom­ic sense than it would on the main­land. Most are inor­di­nate­ly depen­dent on cost­ly import­ed oil, leav­ing Hawaii and Puer­to Rico with some of the high­est elec­tric­i­ty costs in the Unit­ed States and its ter­ri­to­ries. What they also have in com­mon is plen­ty of sun­shine, which trans­lates into near-opti­mum con­di­tions for solar. Yet despite the rapid growth of renew­ables world­wide in the last sev­er­al years, sev­er­al tech­ni­cal and eco­nom­ic bar­ri­ers remain to a mas­sive switchover. Among the biggest is stor­age, which is part of what led the Kauai Island Util­i­ty Coop­er­a­tive (KIUC) to team up with Tes­la to bring the company’s poten­tial­ly rev­o­lu­tion­ary solar pan­el and bat­tery sys­tems to a scale large enough to poten­tial­ly pow­er the entire island.

The island’s offi­cial goal is to source 50 per­cent of its elec­tric­i­ty from renew­ables by 2023. It’s like­ly now that Kauai will hit that goal ahead of sched­ule, employ­ing55,000-solar-panel farm with near­ly 300 util­i­ty-scale Pow­er­pack bat­ter­ies, which allow excess solar pow­er to be used at a lat­er date. KIUC now expects to hit its ini­tial 2023 goal by 2018, and has now upped its tar­get for 2023 to 70 per­cent renew­able gen­er­a­tion. If this cur­rent suc­cess con­tin­ues, it could be a mod­el not just for bring­ing solar to util­i­ty scale, gen­er­al­ly defined as the capac­i­ty to gen­er­ate 10 megawatts of pow­er or more — it could also show what an at least some­what equi­table and demo­c­ra­t­ic pub­lic-pri­vate part­ner­ship could look like. At a time when renew­able pro­duc­tion and tech­nol­o­gy is almost entire­ly dom­i­nat­ed by the pri­vate sec­tor, such deals will like­ly be an inevitable part of get­ting off fos­sil fuels with­in the short time­line physics has laid out.

But what’s so dif­fer­ent about what hap­pened on Kauai and what Musk is like­ly to do in Puer­to Rico? The KIUC is a rur­al elec­tric coop­er­a­tive, owned and oper­at­ed by its mem­bers. KIUC’s board vot­ed to use more solar, and the utility’s legal man­date is to pro­vide afford­able, reli­able pow­er to its mem­bers — not prof­its to share­hold­ers or ven­ture cap­i­tal­ists. That’s a good deal dif­fer­ent than what we already know of nego­ti­a­tions between Rossel­lo and Musk, tak­ing place behind closed doors and being report­ed out piece­meal through Twit­ter. For now, PREPA car­ries a sim­i­lar man­date to serve the pub­lic as a pub­lic cor­po­ra­tion, though pri­va­ti­za­tion could change that. If its oper­a­tions are bro­ken up and sold off — as one pro­pos­al out­lined — dif­fer­ent pieces of PREPA (or the util­i­ty for­mer­ly known as PREPA) could be account­able to dif­fer­ent sets of shareholders.

Anoth­er ques­tion is what Tesla’s entry into the island could mean for Puer­to Rican work­ers. PREPA is cur­rent­ly home to one of the island’s most pow­er­ful unions, UTI­ER. Attempts to pri­va­tize the util­i­ty — or sell pieces of its gen­er­a­tion and trans­mis­sion oper­a­tions off to dif­fer­ent bid­ders — could see the union bro­ken up entire­ly. As is already known, Musk is cer­tain­ly no friend to labor: Tesla’s Fre­mont, Calif., fac­to­ry has been at the cen­ter of a harsh labor dis­pute as work­ers have attempt­ed to secure recog­ni­tion with the Unit­ed Auto Work­ers, report­ing near-Dick­en­sian work­ing con­di­tions on the fac­to­ry floor. One Tes­la tech­ni­cian told Guardian reporter Julia Car­rie Wong, I’ve seen peo­ple pass out, hit the floor like a pan­cake and smash their face open.” In response to the union dri­ve, Musk promised work­ers frozen yogurt.

As UTI­ER orga­niz­ers have warned for months, Rossel­lo and the over­sight board now con­trol­ling Puer­to Rico’s finances have been clear about their inten­tion to pri­va­tize PREPA, and poten­tial­ly sell­ing off var­i­ous aspects of the util­i­ty to the high­est bid­der. Musk’s pro­pos­al could be an oppor­tu­ni­ty to cur­ry pub­lic favor for privatization.

Four of the board’s sev­en mem­bers penned a Wall Street Jour­nal op-ed back in June call­ing explic­it­ly to pri­va­tize PREPA in order to mod­ern­ize its pow­er sup­ply, depoliti­cize its man­age­ment, reform pen­sions, and rene­go­ti­ate labor and oth­er con­tracts to oper­ate more effi­cient­ly.” In July, they entered into a six-fig­ure-per-month con­tract with pri­va­ti­za­tion experts McK­in­sey & Co. to (among oth­er things) draw up Detailed privatization/​corporatization plans sup­port­ed by finan­cial mod­els and mar­ket engage­ment.” Pri­va­ti­za­tion talks picked up after the island’s brush with Irma, and still more voic­es from out­side the island have joined the call for pri­va­ti­za­tion in Maria’s wake.

Even for­mer House speak­er Newt Gin­grich has weighed in with per­haps the most bla­tant post-Maria dis­as­ter cap­i­tal­ist scheme yet, lay­ing out a plan for replac­ing rather than repair­ing old high­way, elec­tri­cal, and water sys­tems” to max­i­mize eco­nom­ic growth,” sug­gest­ing that the Trump admin­is­tra­tion inte­grate pri­vate sec­tor and pri­vate cap­i­tal to lever­age funds” in Puer­to Rico. Once the sys­tem is com­plet­ed,” he adds, the admin­is­tra­tion should grant long-term con­ces­sions to the pri­vate sec­tor under a pay­ment mech­a­nism to reim­burse the fed­er­al tax­pay­ers and ensure long-term mod­ern­iza­tion and per­for­mance.” Gin­grich may not be the pow­er play­er he once was in con­ser­v­a­tive pol­i­tics, but his pro­pos­als are more or less in line with those that have emerged from the over­sight board.

As a result of Maria, the board has also invoked Title V of PROME­SA, the bill that put the board in charge of the island. That pro­vi­sion gives broad man­date to a board-appoint­ed offi­cial, revi­tal­iza­tion coor­di­na­tor Noël Zamot, to solic­it and approve pub­lic-pri­vate part­ner­ships with­out much pub­lic or envi­ron­men­tal review, bypass­ing the island’s reg­u­la­to­ry process almost entirely.

There’s a 21st cen­tu­ry feel good charm to Musk and Rossello’s back-and-forth — and plen­ty of sub­stan­tive good that could come from some kind of part­ner­ship between PREPA and Tes­la. Yet, as of now, the fledg­ling deal looks to be fit­ting into a long-run­ning pat­tern in Puer­to Rico: Of Puer­to Ricans hav­ing deci­sions about near­ly every aspect of life made for them, with­out much sem­blance of demo­c­ra­t­ic participation.

Kate Aronoff is a Brook­lyn-based jour­nal­ist cov­er­ing cli­mate and U.S. pol­i­tics, and a con­tribut­ing writer at The Inter­cept. Fol­low her on Twit­ter @katearonoff.
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