Power policy

The Dominican Republic has set a target for renewable energy to account for 25% of total power generation by 2025 but renewables only made up 9% of total power generation in 2022. After re-evaluating the target, the current government set a new target of 30% for non-conventional renewables generation (wind, solar and biomass) by 2030. As of December 2021, those three technologies accounted for some 9% of the 21,455 gigawatt-hours the country had consumed during the year.

The Dominican Republic also has in place a net metering program, which allows retail electricity customers with rooftop solar to be compensated through credits on their bills for sending surplus generation back to the grid. As of December 2021, there was a total of 8,435 participants in the Net Metering Program and the total capacity installed was 209.5 megawatts compared with 5,047 users and 135.49 megawatts installed in January 2020.

The Dominican Republic provides tax incentives and priority dispatch for renewable energy. These include both import tax and value-added tax (VAT) exemptions for machinery and equipment.

Power prices and costs

The average residential power tariff dropped by a massive 35% in 2019 from a year earlier to $86.42 a megawatt-hour. Commercial prices also fell in 2019, from $176.60 a megawatt-hour in 2018 to $167.78. Average industrial prices decreased only slightly, to $143.45 a megawatt-hour. Since 2019, these power prices have remained constant. Meanwhile, wholesale prices have fluctuated every year in the past decade, with an average price of $ 110 a megawatt-hour in 2021. The country has an energy consumption subsidy program called BonoLuz in place to help low-income families pay for electricity access of up to 100 kilowatt-hours a month.

Subsidies targeting the retail segment of the power market have kept prices particularly low. However, the current government in 2020 abolished fossil fuel subsidies.

Producers can structure their rates to align them with their business model and participate in competitive public bids.

Power market

The Dominican Republic had 8.56 gigawatts of installed capacity in 2021, compared with 8.33 gigawatts in 2020. Oil, diesel and coal are the main sources of electricity, accounting for 6.1 gigawatts, or approximately 71% of the total capacity. Small hydro, wind, solar and biomass together account for 1.22 gigawatts, or 14%.

The generation market is composed of several players, including private and state-owned companies. There is a spot market where generators, distributors and large end-users can buy or sell the short-term energy deficit or surplus.

In August 2020, President Luis Abinader, through Decree 342-20, ordered the liquidation of the Dominican Corporation of State Electric Companies (Corporacion Dominicana de Empresas Electricas Estatales, CDEEE), the administrator of state-owned or controlled companies in the country’s power sector. Its functions were transferred to the Ministry of Energy and Mines (MEM). The decree also initiated the restructuring of the Unit of Rural and Suburban Electrification (Unidad de Electrificacion Rural y Suburbana, UERS) – which oversees the electrification of regions outside of urban areas – and the merger of the three boards of directors of the electricity distribution companies (EDEs) into a single entity.

The conditions of contracts differ among power purchase agreements (PPAs). However, some points in common are that the National Energy Commission (Comision Nacional de Energia, CNE) guarantees a 15-year duration PPA for wind and solar projects, they are negotiated in US dollars and the government guarantees timely payments.

Doing business and barriers

According to the National Energy Commission, grid expansion is a high-priority issue. The Dominican Republic plans to provide universal electricity access through various programs and agencies such as UERS. Dominican Republic’s achieved 100% electrification rate in 2020 and demand for power in the country has grown briskly over a decade from 38.09 megawatts in 2011 to 57.08 megawatts in 2021, while average annual generation grew 36% over the same period.

The General Electricity Law states that if a generation company decides to settle in a geographical area where there are no interconnection facilities with the electric power system, it can obtain a special concession to install an interconnection line, provided that the transmission company does not assume the corresponding investments. In this case, the transmission company will have to reach an agreement with the generator on how it will reimburse the costs incurred by the latter.

It is possible to set up residential and commercial PV and mini grids for personal use. However, the electricity law prohibits the distribution or sale to third parties (exclusivity of distribution companies). They can only be sold to consumers with a license for unregulated users of the electricity rate. The Dominican Republic also has a net-metering program that spurs end-users to generate their own electricity.

Following a change of government in 2020, the Ministry of Energy has made significant headway in elevating the country as an attractive investment destination in the region, as it has established clear rules and standards and the government has demonstrated its reliability in repaying debts. The closure of CDEEE reduced bureaucratic red tape and helped the government make substantial administrative cost savings.

The main barriers are related to the poor quality of the grid infrastructure to connect new renewable energy projects to the national system (once the projects may be installed far from the grid to take advantage of better solar irradiation) and the lack of regulation for storage projects.

The Dominican Republic’s power market has improved and showed itself to be a stable market for the development of renewable energy projects. Easier bureaucratic processes and greater regulatory clarity and transparency, especially for storage, are the missing driving factors that will spur the growth of a booming market that would attract more projects and financing.

EV market

Electric vehicle (EV) sales in the Dominican Republic have increased from only 34 cars in 2017 to 617 in 2021, including hybrids. The government is yet to implement a decree that regulates EV chargers and introduce incentives related to electricity tariffs and charging infrastructure. While this market is on the rise, gasoline is the most affected by tax levels, which are at 36%. In order to incentivize the import of non-conventional energy vehicles, the Dominican Republic allows EVs to enter the country by paying only 50% of the usual tariff, 50% of value-added tax (VAT) and 50% for the First Plate tariff. However, the benefit applies only to the importer, not the consumer, which means that the rate reduction is not transferred to a third party when the vehicle is sold.

EV policy

The National Strategic Plan for Electric Mobility published in 2020 expects that by 2030, some 70% of the public transport fleet will be electric vehicles and in the case of private vehicles, it will be 15% by 2025 and 30% by 2030. In addition, another target is that electric motorcycles registered from the private sector represent 5% of the national fleet by 2030. It also expects to set up 14,000 EV chargers by 2030.

Buildings market

The tropical climate of the Dominican Republic means the focus is on cooling rather than heating buildings. There is a lack of substantive policy support to improve the energy efficiency and carbon intensity of such efforts.

Buildings policy

There are no specific laws.