Part 2: Clear Policy Signals To Develop 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.
Far from the media spotlight, the Dominican Republic is paving its way to a cleaner energy sector. Over the past ten years, the government has published a large set of policies and laws to incentivize renewable energy production. Lifting clean-energy development to a constitutional objective, Article 67 of the Constitution of 2010 reads, “The State shall promote in the public and the private sector the use of clean alternative technologies to preserve the environment.”
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 on Renewable Sources of Energy Incentives and its Special Regimes and its appending regulation, which sets a target of 25 percent of renewable energies in the country’s final electricity consumption by 2025. The law also aims at “opening the door” to sustained commercial financing for the renewable sector through financial incentives such as tax exemptions, a feed-in-tariff (FiT), and a national fund for renewable energies, discussed in more detail in this blog series.
Generally, Law 57-07 has helped increase investor confidence by sending a clear signal and by laying out an array of financial incentives to help investors. The Dominican Republic’s first utility-scale wind farms in Los Cocos and Quilvio Cabrera, with a total capacity of 33.5 MW, are soon to come online. Despite a number of delays and difficulties during the project’s development phase, the operator EGE HAINA is already planning a second phase for the project, which would add an additional 75 MW of capacity. The market for residential and commercial systems is also expanding; the Dominican Association of Renewable Energy Businesses counted more than 40 companies specialized in supplying, developing or installing renewable energy technologies to the Dominican Republic’s market in August 2011. Banco Hipotecario Dominicano (BHD), one of the top five Dominican Banks, has also been developing with the International Finance Corporation a credit line to finance renewable energies.
|Objective||Implementing Agency||Financial incentive|
|Constitution (2010)||The State shall promote in the public and the private sector the use of clean alternative technologies to preserve the environment|
|General Electricity Act Law 125-01 (2001) + Decree 749-02 (Sept 2002)||Establishes a regulatory and legal framework for the production, transmission, distribution and commercialization of electricity||Creation of a National Energy Commission (CNE) to develop energy policy measures and long-term planning of the energy sector||Exemption of companies generating electricity from renewable energy sources from national and local taxes for five years|
|Law 186-07||Reduces electricity theft||Establishes state institutions responsible for monitoring and ensuring strict compliance of the law. These are the National Energy Commission (CNE) and the Superintendency of Electricity (SIE)|
|Decree 601-08||Creates a National Climate Change Council and whose role is to plan and coordinate CDM projects (CNCCMDL)||CNCCMLD||Plan CDM investments. Contribute to the mitigation of Climate Change by means of investments that are environmentally sustainable through projects or other instruments using the international mechanisms provided by the UNFCCC and its Kyoto Protocol|
|Law 57-07 (2007) + regulation 202-08||A target of 25% renewable energies by 2025 “opens the door” to sustained commercial financing for the renewable energy sector through financial incentives||National Energy Commission||Tax exemptions and tax credits. Feed in tariff. Subsidies for small scale community projects. Domestic Renewable energies Fund|
Overview of policies and regulations relevant to renewable energies development in the Dominican Republic,
Compiled by Worldwatch
How have these policies influenced the actual development of the renewable energies sector? Stay tuned for part 3 of the series for a detailed analysis of the Dominican Republic’s public financial incentives to promote renewable energies.