ING. ALEXIS J.

MIRANDA RAMIREZ
Associate Director

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
 Agenda
Agenda

Energy Bill
– Renewable Portfolio Standard

– Renewable Energy Certificates

– Green Energy Fund

Law #73
– Wheeling

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
 Energy Bill
Agenda

• Act # 82 July 19th, 2010 – Also known as

“Renewable Portfolio Standard (RPS)”
• Enforce the generation of electricity from renewable energy
sources, hence promotes diversification of the energy mix
and reduction of dependency on fossil fuels.
• Establishes minimum targets for of renewable energy
generation in P.R.
• Implement a Renewable Energy Credits (RECs) system

Year(s) Target
(% Renewable Energy Production)
2015 12%
2020 15%
2035 20%

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
 Renewable Energy Portfolio (RPS)

• Diversification is the Key to Reduce Energy Price

– The Renewable Energy Portfolio (or Renewable Portfolio Standard-RPF) is a legal energy
policy that requires an increment in renewable energy production through the use of
wind, solar, biomass and geothermic among others
– This diversification will reduce Puerto Rico’s oil dependency
• Diversification
Helps reduce and stabilize electricity prices
– 29 states and the District of Columbia have implemented an RPS

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
4
 Green Agenda
Energy

As defined by the Energy Bill, Green

Energy is:
– Alternate Renewable Energy
• Energy from Waste (MSW)
• Landfill gas combustion
• Anaerobic digestion
• Any other source as defined by EAA
– Sustainable Renewable Energy
• Solar- Photovoltaic and/or Solar-Thermal
• Wind
• Geothermal and Ocean Energy
• Renewable biomass combustion, combustion of renewable
biomass gas or combustion of biofuels
• Qualified Hydropower ENERGY AFFAIRS ADMINISTRATION
Government of Puerto Rico
 Green Agenda
Energy

• Renewable Biomass

– Organic or organisms biological byproducts with a power

generation potential.

• Wood feedstock
• Natural biomass
• Alcohol byproducts
• Residual biomass- generated from agricultural
activities

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
 Renewable Energy Credits

• Creation of Renewable Energy Credits (RECs)

– Puerto Rico will adopt a Renewable Energy Credit system
– REC – a certificate considered as an instrument with economic value
that can be bought, sold or transferred between persons and that
represents the equivalent of one (1) MWh of electricity generated
from a renewable energy or alternate renewable energy source
Conventional Renewable Energy
Generation Generation

Electricity
Electricity REC

1 Product 2 Products

ENERGY AFFAIRS ADMINISTRATION

7
Government of Puerto Rico
7
 Renewable Energy Certificates

• Production Incentives based on RECs

– RECs will be registered in the North American Renewable Registry. This will
facilitate the marketability of RECs
– RECs could be marketable either on compliance or voluntary markets.
– RECs have their own economic value and they are marketable in the United
States. Entities required to comply with an RPS from the other 29+ states or
companies with corporate social responsibility could buy PR’s RECs.
The REC is
Data is An
Renewable Production deposited
1 2 data is sent 3 processed 4 electronic 5
Energy on the
and REC is
Generation to the registry producers
validated created
account

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
8
 Energy Bill
Agenda

• Act #83 July 19th, 2010 0 Also known as “Green

Energy Fund”
• All financial incentives will be granted by a special fund
called Green Energy Fund, an investment fund for future
generations
• Will promote and develop a new and robust green industry,
and create thousand of green jobs.
• $290 Millons within the next 10 years
• Green Energy Fund will apart from the General Fund.

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
 Green Energy Fund
• Green Energy Fund (GEF) Creation
– Starting as on FY 2011-2012, funds will be collected from motor
vehicles tax consistent with Sec. 2011 of the Internal Revenue Code
of PR.
– These funds will be received by the Dept. of Treasury (DT) and used
for the purposes described in this Act, as it follows:

Fiscal Year Funds

2011-2012 $20,000,000
2012-2013 $20,000,000
2013-2014 $25,000,000
2014-2015 $30,000,000
2015-2016 $35,000,000
2016-2020 $40,000,000

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
10
 Green Energy Fund
• Eligible Activities
– Any business dedicated to the production or selling of green energy
at a commercial scale for its consumption within PR. (Owner
and/Operator are both considered as business dedicated to eligible
activities)
– Green Energy Producer, as per definition provided in Art. 1.4
– Green Energy Generation Equipment Assembly, including installation
of equipment in user’s facilities for Green Energy Production.
– Property dedicated to the production of green energy.

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
11
 Green Energy Fund
Rebate Programs for Green Energy Investment (Art. 2.8)
Small Scale
• Allow individuals and small companies have more control over energy prices thus
reducing expenses and increasing available incomes
Tier 1 • Project size: 0—100 kW
• Market: Residential & Small Businesses
• Incentive: Up to 60% in reimbursements (GEF)

Medium Scale
• Establishes a dynamic market that will attract new investments in the
manufacturing of renewable energy equipments
Tier 2 • Project size:100 kW + —1 MW
• Market: Industrial and Commercial
• Incentive: Up to 50% in reimbursements (GEF)

Utility Scale
• Considerably reduces oil dependency, creates an economic stimulus and green
jobs are created
Tier 3 • Project size: 1 MW+
• Market: Independent Power Producer
• Incentive: Access to the RECs market

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
12
 Green Energy Fund

• Tax Exemption
– Furthermore, the Energy Bill creates a special tax exemption for companies with
the primary purpose of renewable energy generation.
– These companies will have the advantage similar to those in Act 73 of 2008:
1. A fixed tax of 4%
2. A reduction on the property and municipal tax
– In addition, the lifespam of the decrees will be of 25 years which is consistent with
the expected life of a renewable energy equipment and their commercial
agreements (e.g. PPAs)

Life of equipment: Tax Decree: 25

25 years years
ENERGY AFFAIRS ADMINISTRATION
Government of Puerto Rico
13
 Green Energy Fund
• Renewable Energy Certificates
– Would be considered as capital gains for taxing purposes but would
not be considered as capital asset.
– Acquired RECs would not pay municipal taxes
– Would have a value for 2 years upon issuance.

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico
14
 Wheeling – Implied Cost per
Agenda
kWh

** Schedule 10 (Backup & Supplemental

Service) still not considered in price** TBD
ENERGY AFFAIRS ADMINISTRATION
Government of Puerto Rico
 Wheeling – Implied Cost per
Agenda
kWh

** Schedule 10 (Backup & Supplemental

Service) still not considered in price** TBD
ENERGY AFFAIRS ADMINISTRATION
Government of Puerto Rico
 Wheeling – Implied Cost per
Agenda
kWh

** Schedule 10 (Backup & Supplemental

Service) still not considered in price** TBD
ENERGY AFFAIRS ADMINISTRATION
Government of Puerto Rico
 Information Resources
Agenda

• We invite you to visit the following

website for more info:
– http://www.aae.gobierno.pr/
• For acquiring the new laws please visit:
– http://www.oslpr.org/buscar/
Contact Info:
– lbernal@aae.pr.gov
• Luis Bernal-Jimenez, Esq. – Executive Director

ENERGY AFFAIRS ADMINISTRATION

Government of Puerto Rico