Part 3: Analyzing the Dominican Republic’s Public Financial Incentives to Promote Renewable Energies
This series of blogs explores current mechanisms in place to finance renewable energies in the Dominican Republic. Be sure not to miss Part 1 on the Dominican Republic’s clean energy entrepreneurs, and Part 2 on the Dominican Republic’s comprehensive legal framework regulating renewable energy technologies.
Worldwide, growth in renewable energy has consistently been a policy-driven process. The design of supportive policies, as well as their effective implementation, has been critical in countries that were successful in developing a favorable investment climate for renewables.
In the Dominican Republic, a whole corpus of domestic laws recognizing the necessity to transition the energy sector to cleaner fuels has been instituted during the past decade, culminating in 2007 with the publication of Law 57-07 and its appending regulation, which sets a solid legal foundation to incentivize renewable energy technologies development, including cost reductions policies such as tax exemptions, loans, capital subsidies, and a Feed-in-Tariff (FiT).
Yet some major barriers remain, hindering sustained growth in the renewable energy sector. The first is the length and unpredictability of administrative procedures to obtain a concession and benefit from the tax credits and tax exemptions laid out in Law 57-07. Business stakeholders have noted, however, that the process has improved considerably in recent years. A second major barrier is uncertainty regarding implementation and regulation of the FiT laid out in Law 57-07, particularly for solar development. Other barriers include a lack of capital availability, the absence of long-term, concessional commercial loans, the difficulty in accessing international financing for renewable energy and energy efficiency, and a lack of knowledge and awareness of financing opportunities and conditions of international climate finance institutions.