DOMINICAN REPUBLIC OFFERS LUCRATIVE

INCENTIVES FOR RENEWABLE ENERGY

INVESTMENTS
Carlos Rymer March 10, 2008
Renewable Energy Director, Romana Sostenible

I
nvestors in the expanding renewable entrepreneurs, researchers, investors, and
energy sector now have a new location other industry leaders to promote the
to add to their list of renewable energy growth of this newly born domestic
hotspots. The Dominican Republic has industry. This, of course, comes on the
become the place to do renewable energy heels of record oil prices and the increasing
business in the Caribbean and one of the reality of climate change, which threatens
key hotspots for all of Latin America. Last to significantly damage the country’s
May, the country passed a landmark agriculture and tourism sectors.
renewable energy law that has already
The Dominican Republic’s energy
attracted over $2 billion worth of new
consumption is growing steadily (see EIA
investments in solar manufacturing, wind,
graph below). Demand is currently around
hydro, and solar thermal power, waste to
14,000 GW-hrs per year for electricity, 1
electricity, ethanol, and biodiesel.
billion gallons of liquid fuels for
To highlight the country’s great appeal for transportation, and 350 million gallons of
renewable energy, the government natural gas for cooking. Energy
celebrated the First International Energy consumption is expected to grow by 4%
Week last January to bring together annually in the next two decades given the
stabilization of energy prices. Renewable
energy is expected to replace current fossil
fuel generation and meet the expected
growth in energy demand.
Renewable energy is set to boom in the
Dominican Republic. Already, there have
been major investments in ethanol,
biodiesel, electricity generation from
bagasse, wind energy, solar
manufacturing, solar thermal power
plants, and even waste-to-electricity plants.
These investments have been facilitated by
the Law on Renewable Energy Incentives
and Special Regimes (57-07), which, in
addition to providing institutional support
for investments in new projects, provides
the following benefits:
• Exemption from all taxes on imported
equipment, sales (including
equipment), and total income;
• A reduction of the tax on interest
payments to 5% for all foreign
finances;
• A tax credit of up to 75% of income tax
on all autoproducers, including
commercial and industrial;
• Low-interest financing for up to 75%
of the total cost of community or
cooperative renewable energy projects;
• A feed-in tariff based on the marginal
cost of distribution and the positive
externalities of the specific renewable
energy technologies; and
• A requirement that at least 10% of the
electricity demand is met by renewable
sources by 2010 and that at least 25% of
electricity demand is met by renewable
sources by 2025.
At a time when oil prices are reaching new
records and climate change is already
affecting society, it is important to achieve
further breakthroughs in already proven
renewable energy technologies, deploy
these technologies on a massive scale, and
build capacity in people to blend into a
new clean energy economy. In the
Dominican Republic, with over 10,000MW
of wind potential, an immense solar
potential, and the availability of large
tracts of attractive lands, there exists the
potential to achieve all of these and to
create a model of what can be done to
address the economy, climate change, and
energy security.
The Dominican Republic is strongly
committed to seeing its energy needs being
met by renewable energy. Currently, the
government subsidy of over $500 million
per year to oil losses is unsustainable, and
only a renewable energy economy will fix
this. The government has already shown
its commitment to make investments in the
country pay off through the landmark
renewable energy law and its commitment
to continue subsidizing the energy sector
until it becomes stable and sustainable. In
the Dominican Republic, renewable energy
businesses have the opportunity to meet
the energy needs of more than 10 million
people in the next two decades.