Politics

House Bill 1523 Offers Data Center Incentives With Power and Water Safeguards in Puerto Rico

Published Oct 20, 2026, 8:11 AM ASTvia NotiCel

At a glance

  • House Project 1523 by Navarro, Nieves Rosario and Jiménez Torres requires qualifying data centers of 5 MW or more to carry 100% of their load in own firm capacity plus a 50% reserve to support the grid.
  • The bill caps potable water use from AAA, requires at least 50% new renewable consumption by year six, and a Power Usage Effectiveness no higher than 1.3.
  • Incentives include a 2% tax for 10 years on the first 20 MW of new load (4% beyond), equipment and property tax exemptions, a 5% computing capacity reservation for the University of Puerto Rico and public users, and 25% of exempt municipal taxes paid to host towns.

Why this matters: With the island’s grid already suffering compromised reserves during the summer, the bill would shift data centers’ power and water burdens onto the companies themselves rather than other ratepayers, while granting them tax exemptions.

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House Bill 1523, by Representatives Jorge Navarro, Jerry Nieves Rosario and Luis Jiménez Torres, would create incentives and requirements to attract and expand data centers and artificial intelligence infrastructure in Puerto Rico. Titled the "Puerto Rico Computing and Artificial Intelligence Infrastructure Development Act," it aims to keep their high energy and water use from falling on other customers.

The local industry is small, with 11 facilities operating and a combined published capacity of no more than 60 megawatts. The bill mainly covers facilities with peak demand of five megawatts or more and says Puerto Rico offers real advantages: US jurisdiction, submarine cable landing stations and a strategic position between North America and Latin America.

To qualify, facilities must have firm capacity of their own covering 100% of their operating load plus a reserve of at least 50% of that load to support the grid. During reserve alerts, load shedding or emergencies they could not rely on grid generation, and they would pay all studies, interconnection and grid upgrades. They could not use potable water for cooling beyond limits set by the Aqueduct and Sewer Authority (AAA) in consultation with the Department of Natural and Environmental Resources (DRNA).

At least 50% of annual consumption must come from new renewable energy by the sixth year, with a Power Usage Effectiveness of no more than 1.3 and closed-loop cooling. Incentives include decrees under the Incentives Code, tax exemptions on equipment, and a 2% tax rate for 10 years on export income from expansions (first 20 megawatts; 4% beyond).

Centers must reserve 5% of computing capacity for the University of Puerto Rico, agencies, towns and local startups, pay their town 25% of exempted property and municipal taxes, and run training programs. The Economic Development Department (DDEC) and the Energy Bureau would have 180 days to approve main regulations.

In context

SourceNotiCel

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