Energy Bureau proposes new framework for clean energy certificates.

By THE STAR STAFF

The Puerto Rico Energy Bureau (PREB) has unveiled a proposed regulation that would establish a comprehensive framework governing renewable energy certificates (RECs) and compliance with the island’s Renewable Energy Portfolio, a central policy tool supporting Puerto Rico’s long‑term transition to sustainable electricity generation.

The proposal is intended to clarify how renewable energy attributes are tracked, verified, and used to demonstrate compliance with statutory renewable energy requirements.

According to the PREB, the proposed regulation aims to provide regulatory certainty for renewable energy producers and retail electricity providers while ensuring transparent, verifiable accounting of renewable energy generation. The framework would apply broadly to electric service companies, renewable energy producers, retail energy providers, and any entity that buys, sells or transfers RECs originating in Puerto Rico.

Under the proposal, an REC is defined as a marketable and negotiable asset representing one megawatt‑hour (MWh) of electricity generated from an eligible renewable energy source in Puerto Rico. Each REC would include all associated environmental and social attributes tied to that unit of generation, such as avoiding greenhouse gas emissions. RECs would be issued and tracked through an approved renewable energy registry to ensure accurate accounting and prevent double-counting.

RECs would be issued when the renewables registry issues a certificate with a unique serial number for electricity generated in a specific calendar year. Renewable energy producers would have until Jan. 31 of the following year to create RECs associated with the prior year’s generation, a provision designed to allow sufficient time for verification, corrections or updates to metering data before certificates are issued.

The proposed regulation also establishes rules governing REC ownership and transactions. RECs would initially belong to the renewable energy source that generated the electricity and could be sold, transferred, or otherwise assigned for lawful purposes. Retail energy providers would be permitted to purchase RECs both to satisfy renewable energy obligations and for other legitimate uses. To support market stability, the regulation introduces a minimum REC value of one cent per MWh, effectively creating a price floor. The PREB would review this minimum value at least every three years to determine whether adjustments are warranted.

A core component of the proposal addresses compliance with Puerto Rico’s Renewable Energy Portfolio. State law requires retail energy providers to supply 100% of their electricity sales from sustainable or alternative renewable energy sources by 2050. Under the regulation, annual compliance would be calculated based on a provider’s total electricity sales, with certain adjustments permitted for legacy hydropower resources and distributed generation credits.

Retail energy providers would primarily demonstrate compliance by submitting RECs to the PREB in quantities corresponding to their renewable energy obligations. The REC system is intended to allow providers to meet portfolio requirements without relying exclusively on direct, physical delivery of renewable electricity, particularly in situations where grid constraints or other limitations apply.

The proposal also establishes detailed reporting requirements. Retail energy providers would be required to submit annual compliance reports by March 31 of each year. The reports would document electricity sales, renewable energy acquisitions, REC transactions and associated compliance costs. The standardized reporting structure is intended to allow the PREB to collect consistent data across providers and monitor progress toward renewable energy targets.

In cases where distributed renewable energy resources cannot feasibly be registered individually in the renewables registry, the regulation would allow providers to submit a renewable energy acquisition report, which would explain the circumstances preventing individual registration and certify that the environmental and renewable attributes associated with the energy are included and accounted for properly.

For calendar years prior to 2050, and in the absence of interim renewable energy targets, the regulation would not require formal compliance demonstrations through REC submissions. Instead, retail energy providers would be required to submit annual informational reports. These reports would enable the PREB to track progress toward long‑term renewable energy goals without imposing penalties or mandating REC procurement in interim years.

The PREB would be granted authority to review compliance and informational reports, issue notices of default and impose penalties when providers fail to meet applicable renewable energy requirements. Proposed fines for non‑compliance would be tied to the level of shortfall and set at no less than twice the value of the minimum REC price multiplied by the amount of unmet renewable energy obligations. Providers would be permitted to present justifications for non‑compliance, including force majeure events or excessive costs, and could be required to submit corrective action plans for future compliance periods.

In a cost‑benefit analysis accompanying the proposal, the PREB concludes that the expected benefits of the regulation outweigh its anticipated costs. The agency notes that compliance costs are expected to be largely administrative, as most affected entities already maintain systems to track renewable generation and associated environmental attributes. The regulation is not expected to significantly affect market competition or impose disproportionate burdens on small businesses.

If adopted, the proposed regulation would take effect 30 days after filing with Puerto Rico’s Department of State and Legislative Library.