Energy transition by harnessing renewable energy
Energy transition by harnessing renewable energy
Business Model Description
Harnessing available natural resources, such as solar energy, the kinetic energy of water and wind power to promote decarbonization and contribute to the fight against climate change through clean and alternative energy.
Expected Impact
The transition to renewable energy drives sustainable development, mitigating climate change, generating employment, and promoting equity.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Cibao Norte
- Valdesia
- Enriquillo
- Yuma
- Ozama
Sector Classification
Renewable Resources and Alternative Energy
Development need
According to the IX Business Convention of the National Council of Private Enterprise (CONEP), in its strategic proposals for the development of the Dominican Republic established "Implement alliances, agreements and business agreements to achieve the commitment of the private sector in meeting the country goals of the Sustainable Consumption and Production Accelerator" (1).
Policy priority
The multi-year public sector plan 2021-2024 proposes to promote the implementation of sustainable production and consumption by: 1) REGULATING the sustainable management of natural resources, 2) PROMOTING clean energy production, 3) PROMOTING sustainable attitudes and practices, 4) REGULATING integrated waste management and 5) PROMOTING innovation and sustainable business" (2).
Gender inequalities and marginalization issues
Women account for 35% of the workforce of the world's leading renewable energy companies, a percentage that far exceeds their representation among traditional energy companies, according to data from the International Renewable Energy Agency (IRENA) (3).
Investment opportunities introduction
There are investment opportunities in solar and wind energy projects, supported by government incentives and financing programs (4).
Key bottlenecks introduction
Challenges include financial constraints, regulatory barriers, and the need to strengthen grid and storage infrastructure to efficiently integrate renewable energy.
Alternative Energy
Development need
The energy sector is the country's main emitter, with a contribution of 62.75% to total emissions and a 90.39% share in the GHG balance in 2015. The main cause is the sustained increase in energy consumption, associated with the increased burning of fossil fuels. In 2022, 83.87 % of electricity generation was based on fossil fuels (5,6).
Policy priority
The DR climate goal for 2030 is to have reduced greenhouse gas emissions by 27% with respect to the BAU (business as usual) trend scenario, taking 2010 as the base year, with estimated emissions in 2030 of 51,000 GgCO2eq. Of the 27%, 20% is conditional on external finance and 7% conditional on domestic finance. Of these 7%, the private sector is responsible for 5% (7).
Gender inequalities and marginalization issues
: Only 16% of the positions on the boards of directors of large international electricity companies are headed by women and, at the current rate, it would take 72 years to reach 40%, according to data from the EY consultancy. In the energy area in the country, 95.1% of those registered are men (8, 9).
Investment opportunities introduction
The national government decided to promote the development of renewable energies through a model based on private investment rather than public investment. A clear and transparent legal framework was created to protect the rights of participants (10).
Key bottlenecks introduction
Faced with global commitments on climate change and the increase in demand for electricity due to the country's high economic growth, it is necessary to implement far-reaching reforms at the political, institutional, regulatory, and financial levels to help increase the share of renewable energies and improve energy efficiency.
Solar Technology and Project Developers
Pipeline Opportunity
Energy transition by harnessing renewable energy
Harnessing available natural resources, such as solar energy, the kinetic energy of water and wind power to promote decarbonization and contribute to the fight against climate change through clean and alternative energy.
Business Case
Market Size and Environment
> USD 1 billion
By 2025, 25% of the energy sold to electricity distributors must be from renewable sources.
According to IRENA, the Dominican Republic has significant potential to increase the share of renewable energy to 44% by 2030. The country today has as installed capacity of renewable energy, mainly wind energy, 1,023 megawatts. Another 1,169 megawatts of renewable energy are under concession, most of which will be ready by mid-2024 (11).
Indicative Return
10% - 15%
According to the World Bank's study of Marginal Abatement Cost Curves, the most favorable cost is the New Natural Gas Plants option. The option with the highest mitigation potential in the subsector was New Wind Farms (for both 2030 and 2050) (12).
Investment Timeframe
Long Term (10+ years)
In the case of wind energy related projects in the Dominican Republic it is up to 30 years.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
In 2022, 83.87% of electricity generation was based on fossil fuels. The remaining 16.13% came from renewable sources, of which 9.55% were non-conventional (solar, wind and biomass) (18).
SENI data show that total generation in 2022 amounted to 20,135.68 gigawatt-hours (GWh), while losses were 322.57 GWh or 1.60% (18).
The country ranked among the last in Latin America with only 1,532 MW produced, of which 625 MW were from hydroelectric sources, 625 MW were from renewable hydroelectric (including mixed plants), 370 MW wind, 490 MW solar and 47 MW bioenergy (18).
Gender & Marginalisation
Marginalized communities face unequal access to energy. According to the energy poverty index 2016, wide margins of difference were evidenced, being for rural areas 60%, while for urban areas it is 38% according to the National Energy Commission (CNE) (19).
Expected Development Outcome
The DR climate goal for 2030 is to have reduced greenhouse gas emissions by 27% with respect to the BAU (business as usual) trend scenario, taking 2010 as the base year, with estimated emissions in 2030 of 51,000 GgCO2eq (20).
Increase the percentage of homes and businesses with access to clean energy in the Dominican Republic.
Decrease imports of fossil fuels for energy production by 2030.
Gender & Marginalisation
Increase female participation in the industry, reducing the gender gap in energy jobs through inclusive training programs.
Promoting the installation of solar panels in marginalized communities contributes to access to clean energy, improving their quality of life through microcredits.
Primary SDGs addressed
7.1.1 Proportion of population with access to electricity
According to data from the United Nations (UN) and the World Bank, the Dominican Republic had a high level of access to electricity. In 2019, it was estimated that almost 99% of the Dominican population had access to electricity. However, some disparities exist in rural and marginalized areas.
The country aims to produce 25% of its electricity from renewable energy sources by 2025.
7.2.1 Renewable energy share in the total final energy consumption
The Dominican Republic is the country in Latin America and the Caribbean most dependent on oil to generate electricity. As of 2017, 52 % of electricity was generated using oil (up from 89 % in the 1980s and 1990s), while 21 % and 13 % came from natural gas and coal, respectively. In 2022, renewable sources accounted for 16 % of electricity generation, up from 12 % in 2019 (21).
13.2.2 Total greenhouse gas emissions per year
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Unplanned job displacement: The transition could affect employees in fossil fuel sectors.
Increased energy prices: Initial investment in renewable energy could increase costs for consumers. May impact lower income households.
Unintended environmental impact: Large renewable projects could have negative effects on local ecosystems and biodiversity.
Dependence on external technology: If technologies are imported, vulnerability to price and supply fluctuations could increase.
Gender inequality and/or marginalization risk: Inequity in access to green jobs: Without a focus on training, the transition could exclude marginalized communities.
Impact Risks
Stagnation in emissions reduction: If the transition does not progress, CO2 emissions could remain high.
Vulnerability to oil prices: Without diversification, dependence on fossil fuels could expose the economy to international volatility.
Limited impact on energy poverty: Without tariff reductions, low-income households could remain without access to affordable energy.
Pressure on natural resources: Increased energy demand could lead to overexploitation of resources such as water and land, affecting the ecological balance.
Gender inequality and/or marginalization risk: Low participation of marginalized communities: Without inclusion, vulnerable groups could be left out of the benefits.
Impact Classification
What
Reduction of CO2 emissions.
Risk
Lack of effective implementation could limit climate mitigation.
Contribution
Contributes to global climate objectives.
Impact Thesis
The transition to renewable energy drives sustainable development, mitigating climate change, generating employment, and promoting equity.
Enabling Environment
Policy Environment
National multiannual public sector plan 2021-2024: redesigns the planning process since the main objective of public policies should be to improve the quality of life of the people (22).
National energy plan 2022-2036: Defines goals and strategies for the diversification of the energy matrix, guiding the direction of the energy transition and providing a political framework (23).
National climate change adaptation plan: Links the transition to renewable energy with climate change adaptation, reinforcing the need to reduce emissions and minimize environmental impacts (24).
Strategic sector plan 2020-2024 of the ministry of energy and mines: Details specific actions and projects to move towards a greater share of renewable energy, providing a roadmap for the business model and investment (25).
Financial Environment
Financial incentives: Access to Financing: Multiple banks offer low-interest loans for renewable projects, facilitating investment. Between 2021 and 2024 alone, between 35 renewable energy concessions, some US$2 billion is expected to be invested in the country (30).
Fiscal incentives: Tax Exemption: Law 57-07 grants tax exemption on equipment and supplies for renewable energy projects, reducing upfront costs. Preferential Tariffs: Distributors are obliged to purchase renewable energy at preferential prices, ensuring a market for investors.
Regulatory Environment
National development strategy Law 1-12: Establishes the promotion of clean energy sources as a key objective, guiding the regulatory framework towards the energy transition (26).
Law 57-07 on Incentives for Renewable Energy and Special Regimes: Establishes fiscal incentives and mechanisms to promote investments in renewable energy, providing a regulatory framework for the transition and business model (27).
Dec. No. 202-08 which approves the Regulations for the application of Law No. 57-07, on Incentives for the Development of Renewable Energy Sources and its Special Regimes (28).
General Electricity Law 125-01: Facilitates the integration of renewable energy generation in the national electricity system, establishing the basis for the adoption of clean and sustainable energies (29).
Marketplace Participants
Private Sector
AKUO Energy, ALIGROUP BIOMASS, EASI, Empresa Generadora de Electricidad Haina (EGE Haina) and Dominican Electric Industry Association (ADIE).
Government
Ministry of Energy and Mines, National Energy Commission, Ministry of Environment and Natural Resources, General Directorate of Internal Taxes and the Superintendency of Electricity.
Multilaterals
German Society for International Cooperation, the International Climate Initiative (IKI) and the United States Agency for International Development (USAID).
Non-Profit
Nature Power Foundation – NPF, Guakía Ambiente.
Public-Private Partnership
Target Locations
Cibao Norte
Valdesia
Enriquillo
Yuma
Ozama
References
- (1) CONEP, 2019. Strategic proposals for the development of the Dominican Republic: https://docs.google.com/viewerng/viewer?url=https://conep.org.do/sites/default/files/propuestas-para-el-desarrollo-de-rd-paginas-eliminadas.pdf.
- (2) MEPYD, 2021. Plan Nacional Plurianual del Sector Publico 2021-2024: https://mepyd.gob.do/wp-content/uploads/drive/DIGEDES/PLAN%20PLURIANUAL%20SECTOR%20PU%CC%81BLICO%202017-2020/PNPSP-Plan%20Nacional%20Plurianual%20del%20Sector%20Pu%CC%81blico.pdf.
- (3) IDB Invest. 2021. Women, Drivers of the Energy Transition. https://idbinvest.org/en/blog/gender/women-drivers-energy-transition#:~:text=Women%20account%20for%2035%25%20of,sustainable%20energy%2C%20climate%20change%2C%20and
- (4) World Bank. Energy management in the Dominican Republic: https://www.datosmundial.com/america/republica-dominicana/balance-energetico.php.
- (5) UNDP, 2020. First Biennial Update Report of the Dominican Republic to the United Nations Framework Convention on Climate Change: https://unfccc.int/sites/default/files/resource/Dominican%20Republic-%20BUR1.pdf
- (6) Energy Transition Project - Promotion of Renewable Energy to Implement Climate Goals in the Dominican Republic: https://transicionenergetica.do/sobre-nosotros/.
- (7) Presidency of the Dominican Republic, 2021. Government aims for 25% of energy consumption to be renewable by 2025: https://presidencia.gob.do/noticias/gobierno-aspira-que-el-25-del-consumo-de-energia-sea-renovable-en-el-ano-2025
- (8) ILO and UNDP, 2023. Rapid Situational Assessment on the potential for just transition and green jobs in the Dominican Republic: Rapid Situational Assessment on the potential for just transition and green jobs in the Dominican Republic: United Nations Development Program (undp.org).
- (9) IDB, 2021. Women, the engine of the energy transition: https://idbinvest.org/es/blog/genero/la-mujer-motor-de-la-transicion-energetica
- (10) GIZ, 2020. Financing Renewable Energies in the Dominican Republic: https://transicionenergetica.do/wp-content/uploads/2021/03/GIZ_DomRep_Financiamiento-Energ%C3%ADas-Renovables_web.pdf
- (11) IRENA. 2016. Renewable Energy Prospects Dominican Republic. https://www.irena.org/Publications/2016/Jul/Renewable-Energy-Prospects-Dominican-Republic#:~:text=A%20REmap%20country%20study%20from,PV)%2C%20wind%20and%20bioenergy.
- (12) World Bank. 2023. What You Need to Know About Abatement Costs and Decarbonization. https://www.worldbank.org/en/news/feature/2023/04/20/what-you-need-to-know-about-abatement-costs-and-decarbonisation
- (13) Diario Libre, 2022. Customers will pay more for energy starting this month amid dissatisfaction with service: https://www.diariolibre.com/economia/energia/2022/07/01/nuevos-precios-de-la-tarifa-electrica-en-julio-de-2022/1922144.
- (14) Law No. 57-07 on Incentives for the Development of Renewable Energy Sources and their Special Regimes: . Special Regimes: https://www.hacienda.gob.do/wp-content/uploads/2018/11/Ley-57-07-sobre-Energia-Renovable.pdf"
- (15) National Energy Commission, 2022. National Energy Plan 2022-2036: https://www.cne.gob.do/wp-content/uploads/2022/08/Plan-Energetico-Nacional-WEB-2022.pdf
- (16) SOLAR RATIONING POTENTIAL IN THE DOMINICAN REPUBLIC: https://www.cne.gob.do/wp-content/uploads/2015/11/potencial-solar.pdf
- (17) EGE Haina's Experience in the Development of Renewable Projects in the Dominican Republic: https://transicionenergetica.do/wp-content/uploads/2020/02/Experiencia-EGE-HAINA-en-Desarrollo-Proyectos-Renovables-en-RD.pdf
- (18) Redacción NID. 2023. Descarbonización en República Dominicana versus América Latina y el Caribe. https://noticiarioinformativo.com/descarbonizacion-en-republica-dominicana-versus-america-latina-y-el-caribe/
- (19) National Energy Commission, 2016: https://www.cne.gob.do/wp-content/uploads/2016/04/analisis-pobreza-energetica-republica-dominicana.pdf
- (20) Gobierno de la República Dominicana. 2020. Contribución Nacionalmente Determinada 2020. https://unfccc.int/sites/default/files/NDC/2022-06/Dominican%20Republic%20First%20NDC%20%28Updated%20Submission%29.pdf
- (21) Energy profile: Dominican Republic: https://www.gem.wiki/Perfil_energ%C3%A9tico:_Rep%C3%BAblica_Dominicana#:~:text=2010%20and%202019.-,Producci%C3%B3n,(0%2C90%20%20%25).
- (22) MEPyD, 2021. Pluriannual National Public Sector Plan 2021-2024: https://mepyd.gob.do/publicaciones/plan-nacional-plurianual-del-sector-publico-2021-2024/.
- (23) National Energy Commission, 2022. National Energy Plan 2022-2036: https://www.cne.gob.do/wp-content/uploads/2022/08/Plan-Energetico-Nacional-WEB-2022.pdf
- (24) NATIONAL PLAN OF ADAPTATION FOR CLIMATE CHANGE IN THE DOMINICAN REPUBLIC 2015-2030 (PNACC RD) https://adaptacion.cambioclimatico.gob.do/wp-content/uploads/2022/07/Plan-Nacional-de-Adaptacion-para-el-Cambio-Climatico-en-RD-2015-2030-PNACC.pdf
- (25) Ministry of Energy and Mines, 2021: PLAN ESTRATEGICO INSTITUCIONAL (PEI) 2021 -2024 https://mem.gob.do/transparencia/wp-content/uploads/2018/10/Plan-Estrategico-Institucional-2021.pdf
- (26) Law 1-12 on the National Development Strategy 2030: https://mepyd.gob.do/wp-content/uploads/drive/UAAES/END/Informes%20Anuales%20END/end_2030.pdf
- (27) Law No. 57-07 on Incentives for the Development of Renewable Energy Sources and their Special Regimes. https://www.hacienda.gob.do/wp-content/uploads/2018/11/Ley-57-07-sobre-Energia-Renovable.pdf
- (28) Decree No. 202-08 which approves the Regulations for the application of Law No. 57-07, on Incentives for the Development of Renewable Energy Sources and its Special Regimes: https://dgii.gov.do/legislacion/reglamentos/Documents/2008/202-08.pdf
- (29) General Electricity Law No. 125-01 and its implementing regulations: https://www.sie.gob.do/images/sie-documentos-pdf/leyes/LeyGeneraldeElecctricidadNo.125-01.pdf
- (30) Bnamericas. 2021. República Dominicana espera inversión de US$2.000mn en energías renovables los próximos tres años. https://www.bnamericas.com/es/noticias/republica-dominicana-espera-inversion-de-us2000mn-en-energias-renovables-los-proximos-tres-anos