Energy & Mining

Watts in Store?


In light of energy import vulnerability, the DR has taken steps to establish its precise domestic resource potential, while also looking to the sky for a solution.

The Dominican Republic (DR) targets 25% of its energy generation to be derived from green renewables by 2025. This is a highly ambitious goal given that today it remains one of the few Latin American nations lacking uninterrupted electricity supply. Therefore, energy security is a priority for the Medina administration, as is the need to reduce the carbon footprint, which the state intends to halve by 2030 from the 2010 level. Sector data indicates that the DR has faced annual expenditure of USD4 billion (7% of GDP) on fossil fuel, which dominates generation with oil (46.0%), natural gas (24.9%), and coal (14.2%), together making up 85% of national power generation in 2014. Meanwhile, renewable energy accounts for 15% of electricity generation, with hydropower on around 13.2% and wind on 1.7%. By 2014, electricity consumption in the DR had reached 13.1 billion kWh, and the figure continues to rise. Yet, interrupted electricity supply distributed over a dated grid, with an estimated 30% loss ratio, presents a clear bottleneck to economic advancement. And meanwhile, dependence on fuel imports makes for extremely high electricity prices borne by the consumer, curbing spending at the retail customer level and investment among SMEs. Add to that annual state power subsidies exceeding USD1 billion, and missed investment opportunities elsewhere in the economy become clearer yet.

Clearly, an efficient energy sector across the entire chain is essential to economic diversification. Therefore, the government’s soul searching over the scenario described above, plus the nation’s history of failed utilities privatization in the 1990s, has resulted in a catch-all program known as the Electrical Pact, geared at addressing supply challenges to render the sector sustainable for tomorrow. Recently, in fact, the Ministry of Energy and Mines became a member of the World Energy Council, a move that left the minister “confident that by coordinating efforts and triggering synergies we will find a solution in which the spirit of cooperation and continental integration will crystallize energy as an effective instrument of equity and social inclusion, in harmony with environmental preservation.”

The DR, generating the bulk of its electricity from fossil fuels, became a member of the Petro Caribe alliance, established in 2005 by erstwhile Venezuelan President Hugo Chavez. Members of that group had enjoyed cheaper Venezuelan oil, with the Dominican Republic being a key beneficiary of up to 55,000 bpd, with financing of 1-50% of the cost of each fuel delivered. The grace period of the financed amount is two years, and the repayment period was 17 -25 years, with 1% interest. According to Reuter’s, in early 2016 the DR had repaid close to USD2 billion of debt to Venezuela for oil advances, which the government in Santo Domingo labeled the largest debt management transaction in the Republic’s economic history. In fact, dependence on Venezuela, buffeted by political turbulence, has prompted the DR to explore alternative domestic energy solutions, both of a hydrocarbon and renewable variety. So much so, that Venezuela is all but discarded as a supplier as of 2017.

Tapping Domestic Resources

In December 2014, Schlumberger won a Ministry of Energy and Mines (MEM) tender to establish the National Hydrocarbon Database (BNDH), a tool central to establishing the nation’s true reserve potential, and the best means of tapping it. The BNDH was subsequently delivered in 2016, and the MEM has also revealed its database of seismic data on 12,690 linear km of untapped territory where no concessions have yet been established to pique investor interest. The most eye-catching are areas in the Enriquillo, Azua, San Juan, Ocoa (offshore), San Pedro (offshore), and East Cibao basins, where faults and structures have the potential to work as hydrocarbon-retaining traps.

In the intervening period, the government has been putting out feelers for potential investment partners. Interest has been registered from the Qatari government, which is particularly interested in the Caribbean nation’s strategic geographical location. It has voiced interest in working on plans for the Dominican Republic to launch a tender for its oil blocks and systematically activate its hydrocarbons industry. The government in March 2016 issued a resolution clarifying the procedure for issuing hydrocarbon exploration and production (E&P) authorization, concessions, and permits.


Sector studies have shown that a 50% renewable energy ratio by 2030 would meet around 90% of projected new electricity demand, while an 85% renewable ratio by that date would vitally put an end to oil use in electricity generation.

Hot Underground Activity

A 2015 Worldwatch Institute renewable energy report on the Dominican Republic indicated that as of 2015 geothermal energy accounted for as much as 27% of the Philippines’ total generation, recommending that the DR go down that avenue in shoring up its energy matrix. Encouragingly, in late December 2016, it emerged that the MEM, and the French Geological and Mining Research Office (BRGM) were indeed investigating the potential for geothermal energy exploitation in 20 areas of the nation; the “Specific Agreement to Evaluate the Geothermal Potential of the Dominican Republic” project was funded by the Inter-American Development Bank (IDB). Of noted interest was the Constanza and Las Yayas de Viajama axis, although geothermal potential in the Padre Las Casas-Vicente Noble- Canoa (west) area exists due to local hot springs, while San Juan de la Maguana, Enriquillo, Pedro Santana, and San José de las Matas boast mineral waters. The latter is important in terms of the geo-tourism opportunities it presents to the nation’s already burgeoning eco-tourism sector


Three hydropower plants that came on-stream in 2014-2015 brought the DR a further 762MW of capacity. Yet it appears that this source of power offers scarce potential for future development, having already been 90% exploited, at a cost of USD1.6 billion between 2010 and 2015. Hydro plants operate for four to six hours per day in DR as stipulated by water dispatchment regulations, which place electricity third in priority use for water behind drinking and agriculture. It seemed as at 2015 that of the 328MW of hydroelectric concessions awarded up to 2012, around 105MW might never materialize.

Here Comes the Sun

On the more encouraging topic of solar energy, TBY spoke to Ignacio Garcí­a Vilches, the Director General of Escala Solar. Speaking from a self-consumption market perspective, he explained how the firm, established in 2010, today holds an 18% share of that market, having by end-2016 installed 7MW. Not only is public awareness of solar energy rising, but so too are related prices declining. And the incentives for investment are there, too, as, “We have Law 57-07, which gives tax credits to companies, or families that buy solar systems. It is a 40% tax credit repaid over a three year period of the total cost of the solar panels and installed converters.”

One can only assume that the solar option will inevitably increase its current 1% contribution to the national energy matrix. And indeed, on a larger scale, we note the DR’s monumental Monte Plata solar project, which marked the first Caribbean outing for Dubai-based international solar developer, Phanes Group. The initial 33.4MW photovoltaic solar array is also the largest such scheme in the Caribbean and is earmarked to supply an annual 50,000MWh of clean energy to the national grid. The 132,000 solar panels array in one fell swoop triples the Republic’s number of installed solar panels, and notably the project has generated more than 300 direct and 1,000 indirect jobs. Phase two lifts the total capacity to 67MW, thereby expanding the DR’s the photovoltaic power output in the country fivefold.

Blowing in the…

Wind power, according to 2015 sector data, is a viable option for the DR, with suitable sites in the southwest, notably Pedernales. Yet, the Worldwatch Institute report indicated that the average capacity factor of 30% estimated for Quilvio Cabrera and Los Cocos would require 85sqkm to annually match the electricity generated nationally back in 2012. Meanwhile, 201sqkm would be required to meet projected annual generation demand in 2030.

Lean and Green

Energy loss mitigation is equally important to additional capacity. Since buildings erected today will likely be around for at least 50 years, it stands to reason that green specifications from the outset present the most efficient means of mitigating greenhouse emissions. Thus, while addressing lingering energy shortfalls, the DR is already making strides in green planning and architecture. José Hernández is the President of Trace International, which in 2012 was selected to install solar energy at Cibao International Airport. “At 1.5MW, this was a big deal for the company (and also marked) the first time in the country that a private company was authorized to complete a project of such scale,” he told TBY. This project showcased the DR’s green credentials while also speaking of future investment potential.

Large retail spaces, as well as offices, are massive energy consumers. Santo Domingo’s first LEED-certified building, Ágora Mall, then, provides another encouraging example of the above-mentioned green planning. The mall received LEED Silver under the Building Design and Construction (BD+C) rating system for Core and Shell work, as tenants are left to undertake their own design.

The DR has taken the energy bull by the horns and is set to open virgin territory for domestic hydrocarbon exploration. This, in combination with renewables, stands to curb energy-related expenditure, while helping to realize the nation’s green ambitions.

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