2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART III - Other Tax Incentives (§§ 10401 — 10855) › Chapter 942 - Green Energy Incentives Act of Puerto Rico (§§ 10421 — 10446) › Subchapter I - Preliminary Provisions (§ 10421) › § 10421 - Definitions

For the purposes of this chapter, the following terms and phrases shall have the meaning stated hereinbelow, except where the context clearly indicates otherwise, and the terms importing the singular number shall be deemed to include the plural and vice versa:
(1) Eligible activity. — Means:
(a) Any business engaged in the production and sale, at a commercial level, of green energy for consumption in Puerto Rico, whether as the owner and direct operator of the production unit or as owner of a production unit operated by another person, in which case, both the owner and the operator shall be deemed to be businesses engaged in an eligible activity for the purposes of this chapter.
(b) Green energy producer, as defined in this section, for consumption in Puerto Rico, provided that this is his/her main business.
(c) Assembly of green energy generation equipment, including the installation of such equipment at the facilities of the green energy user to be produced by such equipment.
(d) Property engaged in the generation of green energy.
(2) Administration. — Means the Energy Affairs Administration created in § 10671 of this title, and attached to the Department of Economic Development and Commerce of Puerto Rico, as successor of the Puerto Rico Office of Energy (“Office of Energy”), attached to the Office of the Governor, created by virtue of Act No. 128 of June 29, 1977, subsequently transferred to the Department of Consumers Affairs and, through the Reorganization Plan No. 1 of December 9, 1993, to the Department of Natural Resources.
(3) Environmental and social attributes. — For the purposes of this chapter, means all RECs qualities and characteristics that are inseparable and represent benefits to nature, the environment, and society that are produced from the energy generated by sustainable renewable energy or alternative renewable energy, but excluding energy attributes, as defined; for the purposes of this chapter, environmental and social attributes include without limitation, reducing environmental pollutants such as carbon dioxide and other gas emissions which may cause the greenhouse effect.
(4) Energy attributes. — For the purposes of this chapter, means electric power benefit production (measured in megawatts-hour (MWh) unit or fractions) from a sustainable renewable energy source or alternative renewable energy source, and includes the use or consumption of electricity and the network’s stability, its production capacity, and its contributions to Puerto Rico’s electric power system.
(5) Authority. — Means the Puerto Rico Electric Power Authority.
(6) Renewable biomass. — Means any organic or biological material derived from organisms that have the potential to generate electricity, such as wood, waste, and alcohol-derived fuels; and includes natural biomass, which is produced naturally without human intervention; residual biomass, which is a byproduct or residue generated in agricultural, forest, and cattle activities, as well as solid residue from the food and agriculture industry and the wood-processing industry; for the purposes of this chapter it also includes any biomass similar in nature to those described, as designated by the Administration.
(7) Renewable Energy Certificate or REC. — Means a personal property that constitutes a tradable and negotiable asset or commodity that may be purchased, sold, assigned, and transferred between persons for any lawful purpose, which is equal to one (1) megawatt-hour of electricity generated from a sustainable renewable energy source or alternative renewable energy source (issued and registered pursuant to this chapter) and represents all environmental and social attributes, as defined in this chapter.
(8) Internal Revenue Code of Puerto Rico. — Means the Puerto Rico Internal Revenue Code of 1994, Act No. 120 of October 31, 1994, or any other subsequent law substituting it.
(9) Evaluating Committee. — Means the committee created in § 10428 of this title.
(10) Participating cooperative. — Means a cooperative described in §§ 1361 et seq. of Title 7, with which the Administration has entered into a participation agreement for the purposes of § 10429(a)(1) of this title.
(11) Installation cost. — Means the production unit acquisition, construction, and installation costs, and the costs associated with the engineering design needed to commence operations or functioning of such production unit.
(12) Green Energy Production Tax Exemption Decree. — Means any of the following: “exemption decree”, “tax exemption”, or merely “exemption”, “decree”, or “grant”, which may be used indistinctively, as advisable, in order to illustrate what the text provides.
(13) Developer. — Means any natural or juridical person engaged in real property project development.
(14) Municipal solid waste. — Means nonhazardous solid waste generated in single or multi-family dwellings, camping or recreational areas, offices, industries, businesses, and similar establishments as a result of the use thereof during the basic activities of human beings and animals, specifically including trash, garbage, and human waste, and any other waste similar in nature, as designated by the Puerto Rico Solid Waste Authority.
(15) Director. — Means the Director of the Exemption Office.
(16) Director of Development. — Means the Executive Director of the Industrial Development Company.
(17) Executive Director. — Means the Executive Director of the Energy Affairs Administration.
(18) Owner. — Means a person who is the titleholder of a production unit or, if not the legal titleholder thereof, if such person owns the production unit, or if the legal title was assigned to another person as part of a financing lease or sale and lease back.
(19) Alternative renewable energy. — Means energy derived from the following sources:
(a) Conversion of municipal solid waste;
(b) landfill gas combustion;
(c) anaerobic digestion;
(d) fuel cells, and
(e) any other energy that the Administration may define in the future through regulations as alternative renewable energy.
(20) Sustainable renewable energy. — Means energy derived from the following sources:
(a) Solar energy.
(b) Wind energy.
(c) Geothermal energy.
(d) Renewable biomass combustion.
(e) Renewable biomass gas combustion.
(f) Combustion of biofuel derived solely from renewable biomass.
(g) Qualified hydropower.
(h) Marine and hydrokinetic renewable energy, as that term is defined in Section 632 of the “Energy Independence and Security Act of 2007”, Pub. L. 110-140, 42 U.S.C. § 17211.
(i) Ocean thermal energy.
(j) Any other clean or renewable energy that the Administration may define in the future, through regulations or order, as renewable energy.
(21) Green energy. — The term “green energy” includes both terms “sustainable renewable energy” and “alternative renewable energy”.
(22) Green Energy Fund. — Means the Green Energy Fund of Puerto Rico, as established in Subchapter II of this chapter.
(23) Sustainable renewable energy source. — Means any electricity source that produces electric power through the use of sustainable renewable energy, as such term is defined in this chapter.
(24) Alternative renewable energy source. — Means any electricity source that produces electric power through the use of alternative renewable energy, as such term is defined in this chapter.
(25) Force majeure. — Means any unforeseeable or unavoidable event, including exceptional events caused by nature such as: earthquakes, floods, hurricanes, (e.g. “acts of God”) and those events resulting from human actions such as riots, strikes, and wars, among others.
(26) Corporations or Partnership controlled group. — Shall have the same meaning as provided in Section 1028 of the Puerto Rico Internal Revenue Code.
(27) Green Energy Income (“GEI”). — Means income earned or derived from the following sources:
(a) The net income generated from the operation of an eligible activity by an exempt business that holds a decree granted by this chapter, which income is computed according to the Internal Revenue Code of Puerto Rico, adjusted by the special deductions provided by this chapter, including the income generated from the sale of RECs, as well as the income generated from the operation of such exempt business when taking an option under § 10436(b) of this title.
(b) The income earned as a dividend or benefit by a corporation or partnership having stock or shareholding stakes in the exempt business making the distribution; provided that such income may be attributable to the GEI earned by such exempt business.
(c) The net income generated by the exempt business that holds a decree granted by this chapter on account of a business interruption insurance policy; provided, that the employment level of the exempt business resulting from the action that originated the collection of such income is not reduced.
(d) The net income generated from the sale of intangible assets and any other right to receive income related to activities or intangible assets related to the eligible activity and owned by the exempt business that holds a decree under this chapter.
(28) Financial institution. — Means a person or an entity described in Section 1024(f)(4) of the Puerto Rico Internal Revenue Code.
(29) Industrial or Tax Incentives Acts. — Means §§ 10641 et seq. of this title, §§ 10101 et seq. of this title, §§ 6001 et seq. of Title 23, §§ 1301 et seq. of Title 12, or any other previous or subsequent analogous act granting economic, tax or any other type of benefits for the production of green energy.
(30) Exempt business. — Means a business engaged in an eligible activity, as defined in this chapter, established or to be established in Puerto Rico by a natural or juridical person, or a combination thereof, that may be organized under a common trade name and that has been granted one or several tax exemption decrees under this chapter.
(31) Exempt predecessor business. — Means any of the following:
(a) Any business which has or had any exemption under this chapter or any industrial or tax incentive act to engage in an eligible activity substantially similar to the one specified in the decree of a successor business; and which twenty-five percent (25%) of its issued and outstanding shares or proprietary interest is or was owned by the successor business or by any shareholder or owner of the successor business holding twenty-five percent (25%) or more of its shares or other proprietary interest of the successor business. This last requirement shall not apply in the case of predecessor businesses under § 10437(a)(4) of this title. For the purpose of this definition:
(1) Holding of shares or any proprietary interest shall be determined in accordance with the rules concerning the holding of corporate stock or shareholding stakes under Subtitle A of the Internal Revenue Code of Puerto Rico.
(2) Should any of the shareholders or owners of a successor business affected by such rules be able to prove, to the satisfaction of the Secretary of the Treasury, that the capital invested or to be invested in the successor business does not derive directly or indirectly from their spouses, straight-line ancestors or descendants, or siblings, but rather, that it derives from their own estate, such rules shall not apply.
(32) Successor business. — Means any business that obtains a decree under this chapter for the production of green energy for consumption in Puerto Rico, whose activity is substantially similar to the one specified in the decree of the predecessor business, including a decree or grant under industrial or tax incentives laws, as established in this chapter.
(33) Exemption Office. — Means the Industrial Tax Exemption Office.
(34) Operator. — Means any person who controls, operates, or manages a production unit, sustainable renewable energy source or alternative renewable energy source.
(35) Person. — Means any individual, partnership, enterprise, association, corporation, public corporation or entity whether or not under the jurisdiction of the Commission or the Administration.
(36) Sustainable renewable energy producer. — Means any operator of a sustainable renewable energy source that generates and sells electricity at commercial level.
(37) Alternative renewable energy producer. — Means the operator of an alternative renewable energy source that generates and sells electricity at commercial level.
(38) Property devoted to the production of green energy. — Means any:
(a) Real property, including lands and improvements or parts thereof, as well as any addition equal to not less than twenty-five percent (25%) of the area of the main facility devoted to the operations of an exempt business, and that is available, used, or owned by an exempt business that holds a decree granted under this chapter, in its development, organization, construction, establishment, or operation.
(b) Group of machinery or equipment necessary for an exempt business that holds a decree granted under this chapter to engage in the activity that qualifies it for the granting of a tax exemption, which machinery or equipment is owned, installed or in any wise used under a contract by such exempt business.
For the purposes of this chapter, the term “property devoted to green energy production” shall not include the so-called financing leases.
(39) Intangible property. — Means any patent, invention, formula, process, design, pattern, know-how, copyright, trade secret, literary, musical or artistic composition, trademark, factory seal, trade name, brand name, franchise, license, contract, method, program, system, procedures, capital gain, campaign, survey, trial, projection, estimates, customer list, technical data, or any other similar property.
(40) Large-scale green energy project. — Means any project for the production of electric power through the use of green energy with capacity greater than one (1) megawatt (MW).
(41) Medium-scale green energy project. — Means any project for the production of electric power through the use of green energy with capacity greater than one hundred (100) kilowatt, and up to one (1) megawatt (MW).
(42) Small-scale green energy project. — Means any project for the production of electric power through the use of green energy whose capacity is of up to one hundred (100) kilowatt (kW).
(43) Substation. — Means a facility where the energy produced by wind turbines is converted to the voltage necessary in order to be connected to electric power transmission or distribution lines.
(44) Secretary of Development. — Means the Secretary of the Department of Economic Development and Commerce of Puerto Rico.
(45) Secretary of the Treasury. — Means the Secretary of the Department of the Treasury of Puerto Rico.
(46) Green energy technology. — Means energy production technology, as provided in subsections (19) and (20) of this section.
(47) Production unit. — Means a plant, machinery, or group of machinery and equipment installed in one or more locations, but which constitutes an integrated green energy project with capacity to produce green energy, including supplementary equipment and structures, such as those related to the distribution of energy produced or to the administrative operations of an exempt business, or green energy project, even when it conducts some of its operations outside of the facilities of such unit. The group of machinery and equipment, and supplementary facilities established in different locations shall be determined to constitute an integrated green energy project taking into account factors such as potential clients for the purchase of energy to be produced, financing agreements, operating efficiencies, managerial control and supervision of capital and human resources, and risk control, among others.
History —July 19, 2010, No. 83, § 1.4.