The federal government has just finalized a $861 million loan guarantee to fund what will be Puerto Rico’s largest utility-scale solar and battery storage installations.

In July, the Department of Energy’s Loan Programs Office announced a conditional commitment to finance two solar-plus-storage facilities on the southern coast of the island, plus two standalone battery energy storage systems. The solar plants combined will have 200 megawatts of solar capacity — enough to power 43,000 homes — while the battery systems are expected to provide up to 285 megawatts of storage capacity.

The installations, collectively called Project Marahu, will be led by Clean Flexible Energy LLC, an ​“indirect subsidiary” of the U.S. energy companies AES Corp. and TotalEnergies Holdings USA. Facilities will be located in the municipalities of Guayama and Salinas.

The DOE offers loans for clean energy projects on the condition that borrowers meet certain financing and administrative requirements. According to the agency, the company has now met all those conditions — meaning soon, hundreds of millions of dollars will start flowing toward construction.

Project Marahu is expected to come online sometime in 2025.

Jigar Shah, director of the DOE’s Loan Programs Office, told Canary Media that the loan presents a major opportunity to diversify and stabilize Puerto Rico’s grid, which currently relies on fossil fuels to produce more than 90 percent of its electricity. ​“There’s a huge potential for additional projects like this,” he said.

The loan is somewhat of a departure for Shah’s office, which typically invests in emerging clean energy technologies that have yet to be commercialized. In this case, the Puerto Rico government sought federal assistance to replace some of its oldest diesel-fired power plants with solar and storage projects through the Energy Infrastructure Reinvestment Program, which was created by the Inflation Reduction Act to help repurpose or replace existing fossil fuel infrastructure, Shah said.

As the island moves toward its clean energy goals, shifting away from those aging fossil fuel plants will become increasingly urgent. In 2019, Puerto Rico legislators voted to phase out coal-fired power by 2028 and switch to all-renewable energy by 2050. (In 2022, renewables only provided 6 percent of Puerto Rico’s electricity.)