Act No. 82 of July 19 of 2010 known as Sustainable and Alternative Renewable Energy Act (Act 82)

  • Recognizes many sources of renewable energy utilizing various technologies.
  • Sets a target of 12% renewable energy production by 2015, and 15% by 2020 with a requirement for retail energy providers to establish a plan to reach 20% renewable energy production by 2035.
  • Financial Incentive – Establishes Renewable Energy Certificates (“RECs”) as legally-recognized assets that can be purchased, sold, traded, and transferred separately from electric power.
  • Mandates the implementation of a renewables registry, an electronic platform to manage the issuance, tracking, and trading of RECs.
  • Creates a permanent Renewable Energy Commission as an oversight entity focused solely on the implementation of the RPS.

Act No. 83 of July 19 of 2010 known as the Green Energy Incentives Act (Act 83)

  • Act 83 creates the Green Energy Fund ( “GEF”) through which the government of Puerto Rico will co-invest $290 million in renewable energy projects over the next 10 years; initially funding $20 million beginning July 1, 2011 (steps up to $40 million by FY 2016); and
  • Through the GEF, the Puerto Rico Energy Affairs Administration will offer cash rebates of up to 60% on the cost of installing Tier 1 or small projects (0-100 kW) for residences and small businesses and up to 50% on the cost of Tier 2 projects (100kW – 1 MW) for commercial or industrial use.
  • Act 83 grants tax incentives to companies dedicated to the production of renewable energy on a commercial scale in the form of:
    • 90% exemption from real and personal property taxes;
    • 60% exemption from municipal license taxes;
    • 100% exemption from sales and use taxes and excise on certain items used in connection with the green energy project;
    • 60% exemption from any municipal taxes levied pursuant to a municipal ordinance;
    • 100% exemption from any tax, law, license, excise tax, rate or fee levied by municipal ordinance on the construction of works related to the green energy project;
    • fixed income tax rate of 4% in lieu of any other income taxes imposed by the internal Revenue Code for a New Puerto Rico; and
    • 100% exemption from income taxes for dividends paid from income derived for renewable energy activities.

The GEF also provides flexibility for the government to establish new investment or incentive programs in the future.