nvestors in the expanding renewable

energy sector now have a new location

to add to their list of renewable energy

hotspots. The Dominican Republic has

become the place to do renewable energy

business in the Caribbean and one of the

key hotspots for all of Latin America. Last

May, the country passed a landmark

renewable energy law that has already

attracted over $2 billion worth of new

investments in solar manufacturing, wind,

hydro, and solar thermal power, waste to

electricity, ethanol, and biodiesel.

To highlight the country’s great appeal for

renewable energy, the government

celebrated the First International Energy

Week last January to bring together

entrepreneurs, researchers, investors, and

other industry leaders to promote the

growth of this newly born domestic

industry. This, of course, comes on the

heels of record oil prices and the increasing

reality of climate change, which threatens

to significantly damage the country’s

agriculture and tourism sectors.

The Dominican Republic’s energy

consumption is growing steadily (see EIA

graph below). Demand is currently around

14,000 GW-hrs per year for electricity, 1

billion gallons of liquid fuels for

transportation, and 350 million gallons of

natural gas for cooking. Energy

consumption is expected to grow by 4%

annually in the next two decades given the

I

DO M I N I C A N R E P U B L I C O F F E R S L U C R A T I V E

IN C E N T I V E S F O R RE N E W A B L E E N E R G Y

IN V E S T M E N T S

Carlos Rymer March 10, 2008

Renewable Energy Director, Romana Sostenible

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.