Energy & Mining

Inherit the Wind

Potential hydrocarbons reserves

As with many other developing nations, the Dominican Republic has long had an unhealthy reliance on fossil fuels for power generation and transportation.

Over the last five years, oil has accounted for approximately 46% of power generation in the country, while natural gas and coal have fueled around 25% and 14% of power plants, respectively. Meanwhile, renewable sources’ contribution to the nation’s grid was just under 15% until recently.

In the absence of any native hydrocarbon resources to tap into, the country needs to import crude and refined fossil fuels to keep its power plants and transportation system running. In 2017, the Dominican Republic spent over USD2.8 billion to import refined petroleum products, petroleum gas, and crude oil.

Recent studies have suggested the island of Hispaniola—on which the Dominican Republic is located—may possess some undiscovered hydrocarbon reserves. A report by the US Geological Survey in 2000 suggested that over 140 million barrels of oil may be located under the island and its territorial waters. Almost two decades after that report, however, such speculations have not led to tangible results.

Although most Dominican citizens benefit from energy subsidies in one form or another, electricity shortage and blackouts have become a familiar aspect of daily life, which has had debilitating effects on the economy. One of the culprits is the country’s aging national electricity transmission and distribution network. As a result of insufficient investment in the electricity grid, a notable part of generated electrical power is currently going to waste.

An upgrade in the country’s electricity grid is called for, but investment in the sector has been less than ideal since the 1999-2001 period, when the segment received remarkable FDI. The main challenge, however, is still the generation of power itself. As such, the sector has high hopes for Punta Catalina Power Central—a 770MW coal-based power plant in Azua built with a total financing of USD2 billion from a pool of European banks.

The country’s capacity for power generation at present is in the region of 3,000MW, and the average peak demand—excluding systemic losses—is just under 2,000MW. This means a 770-MW plant will go a long way in alleviating the nation’s energy problems.

After a few hold-ups due to financing problems, the Punta Catalina Power Central project was pronounced almost completed in December 2018. According to the Dominican Corporation of State Electrical Companies (CDEEE), the plant began operations at the end of February 2019, contributing some 50-200MW to the national grid during its test phase. 2018 and 1Q2019 also saw the completion of smaller plants constructed by private companies. The Wärtsilä power plant was handed over in the final days of 2018, and with a nominal capacity of 50MW, the multi-fuel plant will mainly meet the needs of the tourism sector.
Fortunately, the Dominican Republic is also well positioned to harness renewable energies. Aside from hydroelectric plants, Los Cocos-Quilvio Cabrera in Pedernales was one of the earliest stabs at renewable energy in the country. With 14 wind turbines, the Los Cocos farm has been contributing to the grid since 2010, and some argue that with 20 or so similar windfarms, the energy problems in the country will be solved.

The Dominican Republic’s real strength, however, may lie in photovoltaics. Located between the Tropic of Cancer and the Equator, the country receives enough sunshine to generate 5-7kWh per square meter each day, according to the Worldwatch Institute. In many EU countries boasting the highest number of installed solar panels in the world, this figure rarely goes over 3.
One of the highlights of 2018 was when the Montecristi solar farm went online. Located near the border with Haiti and financed by a group of European banks, the park is said to be the largest photovoltaic plant in the Caribbean region and currently has the nominal capacity of 58MW, which can be raised to nearly 120MW. The solar plant’s output will be sold to the national utility company.

All things considered, and given the number of energy projects that became operational in 2018 and early 2019, this year may be a turning point for the Dominican Republic’s energy sector.

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