Bottom Line: The Puerto Rico Public-Private Partnerships Authority has issued RFQ 2026-01, launching a dedicated procurement for up to 600 MW of new gas turbine generation at the PREPA Costa Sur complex in Guayanilla. Statements of qualifications are due March 17, 2026. The process is separate from—but counts toward—the island’s broader 3,000 MW generation procurement. Energy developers, independent power producers, and project finance teams should take note: this is one of the largest single-site power generation opportunities in the Caribbean.
Puerto Rico’s electric grid has been in a state of crisis for some time even though its been improving. The island’s generation fleet—with an installed nameplate capacity of roughly 5,400MW—operates at a fraction of that due to extended outages, derates, and catastrophic equipment failures. The January 2020 earthquakes caused significant structural damage at the Costa Sur complex, and in early 2025, the failure of Aguirre Unit 1 triggered a generation emergency that prompted PREB to order the procurement of both emergency and long-term capacity.
PREB’s March and May 2025 orders directed the P3 Authority to initiate a competitive procurement for up to 3,000 MW of new flexible generation capacity island-wide. The Authority launched that broader process in October 2025. But the volume of proponent interest specifically in the Costa Sur site led the Authority to carve Costa Sur out into its own dedicated procurement track—RFQ 2026-01, issued on February 24, 2026.
The rationale is straightforward. Costa Sur hosts two of PREPA’s oldest gas-fired units—Costa Sur 5 and 6, installed between 1972 and 1973, originally oil-fired and converted to natural gas in 2012. These units are approaching the end of their useful life. Replacing them with modern, efficient gas turbine technology at the same site avoids the cost and complexity of greenfield development while leveraging existing grid interconnection and fuel delivery infrastructure.
The project scope is well-defined. The Authority is seeking individual gas turbine units of approximately 150 to 200 MW each, with a combined maximum capacity of 600 MW. The facility must be dual-fuel capable, operating on both natural gas and ultra-low sulfur diesel. It must have fast-start, fast ramp-down, and black-start capability, and must be able to operate in both combined-cycle and simple-cycle modes.
The target is full commercial operation within 30 months of notice to proceed. Coal-fired and nuclear generation are excluded under applicable Puerto Rico law.
This is not a technology-agnostic procurement like the broader 3,000 MW process. The Costa Sur RFQ specifically requires gas turbine generation, reflecting the site’s existing fuel infrastructure and its strategic role in the southern generation corridor. Total capacity across both the Costa Sur and island-wide procurements will not exceed 3,000 MW combined.
Theprocurement follows Puerto Rico’s established PPP framework under Act 120-2018:
Stage 1 –RFQ (Qualification). Respondents submit Statements of Qualifications. ThePartnership Committee evaluates submissions and identifies QualifiedRespondents eligible to advance.
Stage 2 –RFP (Binding Bid). Qualified Respondents sign a confidentiality agreement,access the data room, receive the RFP package (including a draft PPOAtemplate), and submit binding proposals. One Private Partner will be selected.
Stage 3 –PPP Contract Implementation. The contract requires sequential approval byPREB, the boards of the P3 Authority and PREPA, the Financial Oversight andManagement Board (FOMB), and the Governor of Puerto Rico. PREPA executes thecontract as the counterparty.
Thismulti-layered approval process is standard for Puerto Rico PPPs, butprospective bidders unfamiliar with the island’s governance structure shouldaccount for the additional time and complexity it introduces.
TheTechnical and Operational Capabilities section carries the most weight at 45 percent. Respondents must demonstrate at least two related-scope projects completed in the last 15 years, availability factors exceeding NERC GADS averages, five years of OSHA 300 records, environmental compliance history, andcombined-cycle operations experience. At least one Team Member must evidence three debt or equity financings totaling $200 million or more.
The messageis clear: the Authority wants proven operators with substantial project finance track records, not aspirational proposals.
Consortiaare permitted and, given the scale and complexity of the project, likely expected. The Lead Consortium Member must hold at least 51 percent beneficialownership and have full decision-making authority. Compliance documentation is required at the RFP stage.
Importantly,no Team Member may participate with more than one Respondent. However, contractors, subcontractors, equipment suppliers, and service providers withoutequity stakes may appear in multiple SOQs as long as their roles are clearly disclosed. This distinction matters for major turbine OEMs and EPC firms thatmay receive outreach from multiple consortia.
Costa Sur isnot a blank canvas. It is an active generation site with several concurrent projects that respondents must account for in their submissions and projectplanning. These include a 200 MW emergency generation plant (with a bidder already selected), a Battery Energy Storage System project by Genera PR, and a200 MW peaker project also by Genera.
The existingCosta Sur 5 and 6 units will not be demolished until the new facility achieves commercial operation, which means the new development must be sequenced andcoordinated around operating infrastructure. On-site diligence requires coordination through Genera, which controls site access. The Private Partnermust also negotiate site control arrangements directly with PREPA—separate from the PPP Contract itself.
Fordevelopers accustomed to greenfield projects, this brownfield complexity will require experienced project management and early engagement with sitestakeholders.
The Private Partner’s compensation will include two components: a net electrical output (energy) payment and a dependable capacity payment. Both are subject to meeting availability and capacity thresholds measured over 12-month periods. Financial penalties apply for shortfalls in availability or capacity, as well as for environmental regulation violations.
Notably, the Private Partner bears full responsibility for fuel procurement, transportation, delivery, storage, and pier maintenance for sea-delivered fuel. This is a significant operational and financial commitment that respondents must factorinto their proposals. Detailed pricing terms and a draft PPOA template will be provided during the RFP stage.
All equipment must meet seismic and hurricane design standards and comply withapplicable ANSI, NEMA, IEEE, ASME, ASCE, NFPA, and NEC codes—a non-trivial requirement given Puerto Rico’s exposure to both seismic and tropical weatherevents.
The RFQ identifies 35 Restricted Parties that cannot participate as Team Members orassist any Respondent. This list includes several major names in Puerto Rico’s energy sector: LUMA Energy and Genera (along with their parent companies) are ineligible to serve as Respondents, and firms such as Cleary Gottlieb, FTI Consulting, McKinsey, New Fortress Energy, Siemens Industry, and Sargent and Lundy are restricted from participation.
Strictno-lobbying and no-collusion rules apply throughout the process. Allc ommunications must be directed exclusively to costasurgenerationrfq@p3.pr.gov.Any direct or indirect contact with the Authority, PREPA, PREB, the FOMB, orGovernment officials outside the prescribed protocol may result in disqualification. Developers who are new to Puerto Rico procurement shouldtreat this restriction with the utmost seriousness.
Severalstandard but significant reservations apply. The Authority retains the right to cancel the procurement at any time, for any or no reason, without cost orliability. No SOQ preparation costs will be reimbursed under any circumstance.The Partnership Committee may limit the shortlist at its absolute discretion.
Judicialreview of procurement decisions is limited to the Puerto Rico Court of Appeals under Section 20 of the PPP Act, and filing a challenge does not trigger a stayof the process. Respondents also agree to broad limitations on damages andwaiver of claims upon submission.
Theseprovisions are standard for Puerto Rico PPP procurements, but they underscore the need for experienced local counsel to navigate the process.
The CostaSur procurement is one piece of a massive generation modernization effort.Puerto Rico’s grid is operating under DOE emergency orders renewed in February2026 that have helped restore up to 820 MW of baseload capacity. Genera PR is deploying 430 MW of Tesla-provided battery energy storage across six sites. Theseparate 3,000 MW procurement launched in October 2025 has already advanced through its RFQ stage, with at least one major participant—Polaris RenewableEnergy—publicly confirming qualification.
For energydevelopers and investors, Puerto Rico represents a rare convergence: aginginfrastructure requiring wholesale replacement, regulatory urgency backed byfederal emergency orders, established PPP legal frameworks, and a 3.2million-person market with suppressed but growing electricity demand. The CostaSur RFQ is arguably the most concrete, site-specific, and actionable opportunity in the current pipeline.
KEY TAKEAWAY FOR PROSPECTIVE BIDDERS
The timeline is aggressive. With SOQs due March 17, 2026, prospective respondents have less than three weeks from the date of issuance to assemble teams, prepare qualification packages, and demonstrate the technical, financial, and operational capabilities required to advance. The emphasis on Technical and Operational Capabilities (45% of the evaluation) means this is not a procurement that rewards paper consortia—it rewards demonstrated experience at scale. Firms considering participation should be assembling their teams and engaging local counsel now.
HOW MACEIRA ZAYAS CAN HELP
Maceira Zayas advises energy developers, independent power producers, and investorson Puerto Rico’s PPP procurement framework, regulatory compliance, andgovernment contracts. For questions about RFQ 2026-01, the Costa Sur procurement process, or related energy matters, contact:
Anthony O. Maceira, Esq.
ManagingMember
amaceira@mzls.com
© 2026Maceira Zayas Law. All rights reserved. This article is provided forinformational purposes only and does not constitute legal advice. Readersshould consult with qualified counsel regarding their specific circumstances.
