Policy DB - REEEP - The Renewable Energy and Energy Efficiency Partnership 2/28/11 1:13 PM

Policy DB Details: Dominican Republic (2009)

Title: Dominican Republic (2009)
Sources:
Total installed electricity capacity (2006): 3.394 GW

Fossil fuels (coal, fuel oil and natural gas): 86%

Hydro-power: 14%.

In 2002, the Dominican Republic was the largest producer of hydro-electricity in the
Caribbean.

Reliance:
Under the San Jose Accord, the Dominican Republic receives crude oil and refined
petroleum products from Mexico and Venezuela (75% of oil imports) at favourable
prices.

Liquefied natural gas (LNG) is imported from Trinidad and Tobago for electricity
generation.

Extended Network:
Distribution networks cover 88% of the population, with about 8% of the
connections thought to be illegal.

Capacity Concerns:
There is a heavy dependence on fossil fuels, all of which have to be imported and
there is a lack of investment in generation.

An ongoing concern in the Dominican Republic is the inability of participants in the

electricity sector to establish financial viability for the system.

Rolling blackouts and electricity shortages have become a way of life for people in
the Dominican Republic. Although the country has more than sufficient generation
capacity to meet local demand, the government’s decision to cap electricity prices,
tolerate theft by end users and give free electricity has resulted in insufficient funds
to state-owned electric distribution companies to cover their operating costs and pay
private sector generators for contracted capacity.

Congress passed a law in 2007 that criminalizes the act of stealing electricity, but it
has not yet been fully implemented. The electricity sector is highly politicized.

Renewable Energy:
Hydropower

In 2008 the Dominican Republic had an installed hydroelectric capacity of 470 MW,

http://www.reeep.org/index.php?id=9353&text=policy&special=viewitem&cid=18 Page 1 of 5
Policy DB - REEEP - The Renewable Energy and Energy Efficiency Partnership 2/28/11 1:13 PM

accounting for 14% of electricity generating capacity. It is expected that, by 2012, an

additional 762 MW will have been added. The 50 MW hydroelectric Pinalito has
started generating energy in 2009 while it is expected that the 99 MW Palomino
hydroelectric, in the southwest, shall start operations in 2011.

Solar energy

High potential.
In February 2009, the Dominican Republic signed an agreement with US firm
Sunovia Energy Technologies for the installation of the country’s first solar energy
plant of 20 MW.

Wind energy

Using conservative assumptions, there is an estimated potential of wind power of at

least 10 GW, possibly a lot more.

In 2008, the Dominican ministry of Environment awarded licenses for the

construction of three wind parks that could produce up to 190 MW of energy.

Biomass energy

The $350 million Fenix Project from RJS Group is set to produce 100 million
gallons of ethanol per year, using sweet sorghum as feedstock, and generate 55/60
MW of electricity.

In January 2009, the Dominican State-owned power companies (CDEEE) and the US
based company Koar Energy Resources signed an agreement to generate energy from
vegetal waste.

Energy Efficiency:
NA

Ownership:
Electricity

Unbundling and privatization began in 1999 with the sale of 50% of the generation.
The government retained control over transmission and hydropower plants and today
owns two of the three distribution companies that have been re-nationalized in 2003.
The formerly state owned Corporación Dominicana de Electricidad – CDE
(Dominican Electricity Company) and also a dozen (mainly American) independent
power providers are active in the Dominican electricity market. These private
companies provide 86% of the installed generating capacity.

Under the General Electricity Act of 2001, independent state-owned power

transmission companies Empresa de Transmisión Eléctrica Dominicana – ETED and
Empresa de Generación Hidro-eléctrica Dominicana – EGEHID were established and
made responsible for the transmission network and the operation of hydroelectric
power plants.

http://www.reeep.org/index.php?id=9353&text=policy&special=viewitem&cid=18 Page 2 of 5
Policy DB - REEEP - The Renewable Energy and Energy Efficiency Partnership 2/28/11 1:13 PM

The tasks of rural and peri-urban electrification, the coordination of electricity

companies, and the administration of contracts with independent power producers
were assigned to a new company - Corporación Dominicana de Empresas Eléctricas
Estatales (CDEEE), which also serves as a holding company for ETED and
EGEHID.

The power distribution networks were privatised in 1999. Unión Fenosa (Spain) took
over the northern and southern grids (EDENORTE/EDESUR), with each holding
50%, and AES (USA) bought into the eastern grid (EDEESTE). Due to the poor
financial and operational situation of the distribution networks, the Dominican
Government reacquired, via CDEEE, Unión Fenosa’s stakes in Edenorte and Edesur
in September 2003.

Competition
A wholesale market exists for transactions between generators, distributors and large
end-users.

Distributors and large end-users can buy electricity from generators under long-term
contracts.

There is a spot market where generators, distributors and large end-users can buy/sell
short term energy deficit/surplus.

The World Bank is currently implementing two projects with an overall cost of US$
50 million. The first one is the Power Sector Technical Assistant (TA) Project that
aims to strengthen the Government’s regulatory and consumer protection
performance, improve policy formulation and portfolio management, improve the
wholesale power market, as well as the quality of electricity for the poor, and protect
the environment. The project’s deadline is June 2009. The second project is the
Electricity Distribution Rehabilitation Project that, until 2012, has targeted the goals
of (a) increasing the cash recovery index of the three electricity distribution
companies in selected areas; and (b) improving the quality of electricity service.

Energy Framework:
Approved in 2007, the Renewable Energies Incentive Law 57-07 grants incentives
and tax exemptions on alternative energy imports and facilities for research and
application of renewable energy technologies. Law 57-07 eliminates former law
2071, opening the country for the development of alternate energy sources. The new
law’s incentives, include the following:

100% exemption over import duties for equipment, machinery and accessories
required for renewable energy production.
Income tax exemption. A 10-year exemption from all taxation on profits up to,
but not beyond, the year 2020.
Fixing of the electricity price from renewables that enters the national grid to
the price of the market for the distributors.
Tax incentive for Self-Producers. Up to a 75% credit on capital cost for
businesses’ shift entirely to renewable energy systems or increase their energy

http://www.reeep.org/index.php?id=9353&text=policy&special=viewitem&cid=18 Page 3 of 5
Policy DB - REEEP - The Renewable Energy and Energy Efficiency Partnership 2/28/11 1:13 PM

consumption share in these. This tax credit will be deferred to the self-
producer’s income tax for the next 3 years.
Community Projects Incentives. All institutions of social interest (community
organizations, registered mutual groups) willing to develop renewable energy
at a small scale (up to 500 KW) and destined to community use, may access
financial assistance funds at the lowest market rate for developing these
projects, for up to 75% cost of the works and its installation.

Every authority of the electric subsector will ensure that 25% of the service needs
will be supplied from renewable energy sources by 2025. For 2015, at least 10% of
the energy purchased by the distributors and trading companies will originate from
renewable energy.

Energy Debates:
A new law, 186-07, making provision for punishment for electricity theft was
promulgated in July 2007.

Electricity subsidies are estimated to exceed US$ 1 billion in 2008, corresponding to

a stunning 3% of Dominica Republic GDP.

Energy Studies:
NA

Role Government:
The National Energy Commission is in charge of developing programs, projects and
legislation for the energy sector, including electricity, hydrocarbons and non-
renewable energy.

Government Agencies:
The Decree no. 146-2000 placed the Program on non-conventional energy under the
auspices of the Industry and Commerce Secretariat for the purpose of promoting
research & development projects concerning the exploitation of renewable energy
sources.

Energy Procedure:
The National Energy Commission (Comisión Nacional de la Energía, CNE) is the
policy agency, one of its main responsibilities being the elaboration of the National
Energy Plan.

Energy Regulator:
The Superintendence of Electricity (SIE) was created in 1998.
http://www.sie.gov.do

Degree Independence:
The Board of the Superintendence of Electricity is composed of 3 members
appointed by the President and ratified by the Congress.

http://www.reeep.org/index.php?id=9353&text=policy&special=viewitem&cid=18 Page 4 of 5
Policy DB - REEEP - The Renewable Energy and Energy Efficiency Partnership 2/28/11 1:13 PM

Regulatory
Framework: The fiscal incentives provided by Law 57-07 make investing in renewable energy
projects in the country a profitable venture. The Dominican Republic is one of the
first countries in Central America and the Caribbean to define a legal corpus on
renewable energy that has helped the National Energy Commission (CNE) to process
more quickly and efficiently the setting up of investing operations. This has helped
significantly in motivating foreign investors to come into the country.

The feed-in tariff scheduled in the Law 57-07 could clearly be favorable to RET as
utility producers could receive a premium equal to the estimated externalities of
fossil fuels for the renewable energy they produce.

CNE shall recommend SIE, a minimum price for each type of renewable energy
handed over to SENI. Such price shall cover the guarantee for a minimum value to
pay for the renewable energies that shall maintain the adequate incentives to
investments.

Additionally, CNE is authorized to recommend SIE the maximum price

corresponding to each type of renewable energy. These reference values (minimum
and maximum) shall be revised annually.

This law also schedules the fixation of a quota of RES by the CNE.

Regulatory Roles:
The Superintendence of Electricity (SIE) functions: Price regulation, enforcement of
quality and safety regulation, market surveillance, consumer protection and conflict
resolution between energy agents.

Energy Role
Regulation: Regulatory tasks are carried out by the Superintendent of Electricity. Government
energy planning and policies are carried out by the National Energy Commission.

Regulatory Barriers:
N/A

Print Policy Profile as XML Data

http://www.reeep.org/index.php?id=9353&text=policy&special=viewitem&cid=18 Page 5 of 5