In July 2010, Puerto Rico enacted two important laws aimed at accelerating Puerto Rico's adaptation of renewable energy and to reduce the island's reliance on fossil fuels. This is especially significant since 70% of the island's electricity comes from oil, according to the government of Puerto Rico. Act 83 created the Green Energy Fund (GEF), which was (for the first time) a dedicated fund held separately from general funds to support renewable energy development in Puerto Rico. The GEF is unlike other public benefits funds in the United States since it is funded by excise (sales) taxes collected on motor vehicles and motorcycles.
The Energy Affairs Administration (EAA) administers the fund and develop programs with oversight from the Department of Economic Development and Commerce and an "Evaluating Committee" established for that purpose. The EAA is allowed to establish grant programs, enter into contracts, provide loans, RECs, or develop other financial aid or investment instruments. Act 83 mandated the first programs funded under the GEF: Tier I and Tier II incentive programs, targeting small-scale and mid-scale renewable energy projects respectively (at $8 million for Tier I program and $11 million for the Tier II program).
In addition, other state or federal funds, donations, income derived from renewable energy credits (RECs), and any non-compliance fines paid under the state's Renewables Portfolio Standardmay be deposited into the GEF. The fund is authorized to collect excise taxes and make expenditures through fiscal year (FY) 2020. The maximum amount of expenditures allowed from the GEF during FY2012 and FY2013 is $20,000,000; it increases over time to a maximum of $40,000,000 during FY2020. Through the GEF, the Government of Puerto Rico will co-invest up to $185 million in the development of renewable energy projects on the island. Starting July 1, 2011, $20 million will be allocated to the GEF.
The Green Energy Fund
The Green Energy Fund supports "green energy" development. Puerto Rico defines green energy as sustainable renewable energy and alternative renewable energy. Sustainable renewable energy includes solar, wind, geothermal, biomass, hydropower, marine and hydrokinetic and ocean thermal. Alternative renewable energy includes municipal solid waste, landfill gas, anaerobic digestion and fuels cells. The GEF offers rebates of up to 40% of the eligible costs for Tier 1 (0-100 kW) projects and up to 50% for Tier 2 (101 kW - 1 MW) projects. Tier 1 rebates for each funding cycle will be allocated on a first-come, first-served basis while Tier 2 rebates will be awarded through a quarterly competitive process.