Potential Options for Electric Power Resiliency in the U.S. Virgin Islands

Summary

In September 2017, Hurricanes Irma and Maria, both Category 5 storms, caused catastrophic damage to the U.S. Virgin Islands (USVI), which include the main islands of Saint Croix, Saint John, and Saint Thomas among other smaller islands and cays. Hurricane Irma hit the USVI on September 6, with the eye passing over St. Thomas and St. John. Fourteen days later, on September 20, the eye of Hurricane Maria swept near St. Croix with maximum winds of 175 mph. The USVI government estimates that total uninsured damage from the hurricanes will exceed $7.5 billion. Although the electric power plants fared “relatively well” according to the local public water and power utility (the Virgin Islands Water and Power Authority [VIWAPA]), 80-90% of the power transmission and distribution systems across the USVI were damaged. In November 2017, the government of the USVI estimated that $850 million in hurricane recovery funding is needed to help “rebuild a more resilient electrical system.”

Before the 2017 hurricane season, VIWAPA was already challenged with fiscal problems and aging infrastructure. Although the USVI has never defaulted on its obligations, its fiscal problems include high debt levels, pension obligations, decreasing tax bases, and outdated infrastructures.

Like many remote island communities, the USVI is dependent on fuel oil for the generation of electricity. Until 2014, VIWAPA was 100% dependent on fuel oil. In 2010, the USVI established a goal to reduce fossil fuel-based energy use by 60% by 2025. As a result, VIWAPA has actively sought to improve energy efficiency and diversify its energy resources, particularly through the use of propane, solar, and wind power.

Initial disaster recovery efforts focused on restoring power. On September 13, 2017, the Federal Emergency Management Agency authorized the U.S. Department of Energy’s Western Area Power Administration (DOE-WAPA) to assist with emergency power restoration efforts on the USVI. DOE-WAPA completed their electric power system restoration activities and left the USVI by November 29.

Hurricanes and extreme weather will continue to threaten the Caribbean, which may prompt Congress to consider infrastructure hardening and improvements to make the systems more resilient. Building a modernized, flexible electric grid, capable of incorporating more renewable sources of electricity, underpinned by more efficient fossil fuel power plants and energy storage, may help the USVI accomplish these goals.

Policymakers are currently considering possible policy options for rebuilding the electricity grid with greater resiliency. This report explores several alternative electric power system structures for meeting the electricity services and needs of the USVI. The cost of rebuilding and modernizing the entire USVI electric grid likely far exceeds the fiscal capacity of the territory in the current budget environment. Incorporating resiliency could also be expensive. Congress may consider the role of comprehensive energy planning and whether the efforts to restore electric power in the USVI should include support for a resilient and modernized electric power system. Additional support for a modernized electrical grid may require new investment by the federal government, investment incentives to form public-private partnerships, or debt adjustments, among other strategies.