The Decree 85 of 1998, regulated by Decree 267-98, provides the legal framework for renewable energy deployment. The law:
Sets renewable energy development projects as a priority over conventional sources in public procurement of electricity when all other conditions are equal.
Establishes tax exemptions in favor of developers of the generation projects including: import duty and sales taxes on equipment, and income taxes.
Provides a 10% premium, to be paid to renewable electricity producers on the price of electricity sold to the national utility (ENEE).
Creates a dedicated fund to develop renewable energy projects, to be financed through penalties for infringement of the electricity law and international cooperation.
Additionally, the Decree requires environmental impact assessments for all renewable energy projects. For energy crops, it also prohibits the introduction of species that can create an ecological imbalance.
Decree 267-98; December 1998: Partial reform and regulates the Incentive Law; Decree 176-99; Febrary 2000: Ammendment Art. 1; Decree 45-2000; July 2000: Ammends Art. 12; Decree 70-07; Oct 2007: creates Law on the Promotion of Electric Power Generation with Renewable Resources (Ley de Promoción para la Generación de Energía Eléctrica con Recursos Renovables);
The ammendments include:
Income tax exemptions limited to 5 years.
Short term marginal cost incentive for renewable energy projects limited to projects under 50 MW.
Several incentives (e.g. Tariff, import duties, sales tax, and income tax exemptions for the period of project study and construction on equipment, accessories, spare parts and temporary imports, and a temporary solidarity contribution imposed on net assets among others) would span a ten-year period from the start of commercial operation for projects up to 50 MW.
Inflation adjustments were modified, limiting them to a maximum of 1.5% per annum (Decree 176-99)
In particular, the Decree 70-2007:
Establishes the Law on the Promotion of Electric Power Generation with Renewable Resources.
Unifies the conditions applicable to generation with renewable resources, to motivate investments in these technologies.