Puerto Rico Aggressively Pursuing Renewable Energy
SAN JUAN, Puerto Rico, July 21, 2010 /PRNewswire
In order to promote and facilitate the development of renewable energy
sources in Puerto Rico, the Government of Puerto Rico is establishing
and implementing a series of new policies that will create the necessary
legal framework to spearhead said development.
Today, Puerto Rico's Governor, Luis G. Fortuno, signed into law several
measures that clearly define Puerto Rico's public policy regarding
renewable energy. The newly enacted Act for a Public Policy for Energy
Diversification Through Sustainable and Alternative Renewable Energy
("Energy Diversification Act") and Green Energy Incentives Act
("Incentives Act") set specific renewable energy production goals and
create economic incentives to facilitate the investments required to
meet those goals.
"We need to aggressively encourage the development of renewable energy
sources for the benefit of all that reside and work in Puerto Rico.
Establishing the right public policy will be the anchor to make it
happen," said Governor Fortuno.
Firstly, 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 gives way
to a Renewable Portfolio Standard ("RPS"), which will require retail
energy providers in the Island to produce or purchase a specified
percentage of their electricity from renewable energy sources. These
portfolio standards set a hard target of 15 percent renewable energy
production by 2020 and require retail energy providers to prepare a plan
to reach 20 percent 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
members ex officio and two named by the Governor for a four year term,
one of which must come from academia.
"RECs validate the value of renewable energy over conventional methods
of producing electricity and in many jurisdictions have helped
incentivize the cost-effective establishment of renewable energy
facilities," said Jose Ramon Perez-Riera, Secretary for Economic
Development and Commerce, who, along with other public officials, will
have a seat in the newly created Commission. The Department of Economic
Development and Commerce is the public entity spearheading the
Government's energy reform efforts.
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 percent for individuals, and 50 percent for
companies, on 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.
"Renewable energy policies and sound economic incentives are key to
attract players of all sizes that can contribute to the creation of a
renewable energy industry in Puerto Rico, jumpstart competition and be
an active part of the solution. This can lead to innovation-based
development and new job creation, while attending concerns over high
energy prices and environmental effects of petroleum-based generation
emissions. It is a win-win for all," added Perez-Riera.
The Fortuno Administration has a mandate of reducing the cost of energy
and ensuring that electric power is affordable, reliable and sustainable
for all residents. Currently, electricity prices in Puerto Rico are
approximately twice the United States average. This is due in large part
to the Island's current dependence on oil for approximately 70 percent
of electricity production.
The Island's overall energy reform banks on the diversification of the
energy generation mix. Currently, petroleum comprises 69 percent of the
mix, followed by natural gas at 16 percent, coal at 15 percent and
renewable sources at 1 percent. The goals forecasted by the
Administration for 2015 contemplate reducing the use of petroleum to 48
percent and keeping coal use constant, while increasing the use of
natural gas to 24 percent and renewable sources to 12 percent.
"Diversification of our energy sources can not wait any longer. The cost
of electricity is undoubtedly the number one obstacle to Puerto Rico's
competitiveness and one of the main concerns of our people. We will be
relentless in our efforts to reduce the cost of electricity for all and
we are confident that our energy reform legislation will have a profound
influence across the board," concluded the Governor.
Already recognized renewable energy players, such as Pattern Energy
Group LP, have announced plans to be part of the action. Secretary
Perez-Riera confirmed that just last month one of Pattern's subsidiaries
entered into a 20-year power purchase agreement (PPA) with the Puerto
Rico Electric Power Authority (PREPA) for the sale of 75 megawatts (MW)
of wind energy that will be produced at their proposed Pattern Santa
Isabel Wind Project.
SOURCE Government of Puerto Rico, Department of Economic Development and
Commerce
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