Renewable Portfolio Standard
Act 82 of July 19th, 2010 lays down specific requirements to promote energy diversification by creating a Renewable Portfolio Standard (RPS). The RPS sets a hard 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. Act 82 also provides the following:
Adoption of the APX North American Renewable Registry (NARR), an electronic platform to manage the issuance, tracking, and trading of Renewable Energy Certificates (RECs).
Creation of a permanent Renewable Energy Commission as an oversight entity focused solely on the implementation of the RPS.
Renewable Energy Certificates
Energy-conservation measures and RECs are among the mechanisms that are being used to implement Puerto Rico’s new energy policy.
Act No. 83 of 2010 defines a REC as an asset that can be bought, sold or transferred between peopleandis equivalent to one (1) MWh of electricity generated from a green energy source.
RECs have their own economic value and could be traded either on compliance or voluntary markets in the United States. Entities required to comply with a Renewable Portfolio Standard (RPS) from other states or companies with corporate social responsibility could buy RECs from green energy sources in Puerto Rico.
RECs will be registered in the North American Renewable Registry. This will facilitate the marketability of RECs. Furthermore, the adoption of a REC framework provides residents of Puerto Rico the opportunity to participate in the REC and renewable energy market that currently exists in the United States. RECs shall be marketable and negotiable in Puerto Rico and abroad. Therefore, the issuance of RECs has an economic value for anyone acquiring, marketing or negotiating them.
How much are RECs worth?
REC prices will fluctuate according to demand and supply dynamics of the RPS Compliance Market.
As stated in Article 2.9 of Act 82 of 2010, “The minimum value of an REC shall be the value provided on the national market at the time the REC is legally traded”. However specific floor prices for each eligible green energy technology will be published at least once a year to establish the required price to enable project viability for each technology.
Alternative Compliance Payments (ACP) are ceiling prices established through many states in order to control compliance cost and avoid significant retail electricity price increase, while still encouraging the fulfillment of the RPS . Puerto Rico’s ACP, also referred to as penalty price, is defined in Article 2.12(g) of Act 82.