Luis G. Fortuno, the governor of Puerto Rico, has signed into law new renewable energy legislation. The Act for a Public Policy for Energy Diversification Through Sustainable and the Alternative Renewable Energy and Green Energy Incentives Act set specific renewable energy production goals and create economic incentives to facilitate the investments required to meet those goals.
The new law establishes public policy rules to increase and diversify energy generation by requiring the purchase and sale of sustainable and alternative renewable energy. Specifically, it sets a renewable portfolio standard (RPS) of 15% by 2020 and requires retail energy providers to prepare a plan to reach 20% renewable energy production by 2028.
In addition, the measure establishes renewable energy certificates (RECs) as the main financial mechanisms to achieve these goals and validates them as legally recognized assets that can be purchased, sold, traded and transferred separately from electric power. It also provides for the creation of a permanent Renewable Energy Commission, comprised of five ex-officio members and two members named by the governor for a four-year term, one of whom must come from academia.
Furthermore, the governor signed a second law that provides a series of short-, medium- and long-term economic incentives to encourage the creation of a new and solid renewable energy industry. This second law creates a Green Energy Fund (GEF), to be established by the Department of the Treasury as a special, independently administrated fund.
Through this mechanism, the government of Puerto Rico will co-invest $290 million in renewable energy projects and other initiatives over the next 10 years. The GEF initiates with a $20 million injection in 2011. Through the GEF, the Puerto Rico Energy Affairs Administration will offer cash rebates of up to 60% for individuals and 50% for companies for the cost of installing residential and industrial projects not exceeding 1 MW of capacity. The GEF also provides flexibility for the government to establish new investment or incentive programs in the future.
For companies dedicated to the production of renewable energy on a commercial scale, the new Incentive Act also provides tax benefits in the form of significant partial exemptions from income taxes, property taxes and municipal taxes; super-depreciation of buildings, structures, machinery and equipment; and eligibility for tax-credits related to the use of locally manufactured products, job creation, and research and development.
SOURCE: Government of Puerto Rico
