Renewable Energy: A Business Opportunity For The Private Sector in The Dominican Republic

High Employment • Affordable Energy • Climate Neutrality • Strong Economy
Renewable Energy: A Business Opportunity for the Private Sector in the Dominican Republic
A Vision for 2030
Renewable Energy: A Business

Opportunity for the Private Sector
in the Dominican Republic
A Call for National Private

Leadership on Climate
Change
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About Romana Sostenible

Romana Sostenible is a non-profit organization founded in 2007 with the
mission of advancing sustainable development in the Dominican
Republic. The organization’s strategy is to increase awareness and build
capacity within the population, work with the governments and the
private sector to incentivize sustainable practices and technologies, and
build grassroots support for long-term sustainability.
The author of this report, Carlos Rymer, is the Renewable Energy

Director and leads the Renewable Energy Committee. Rymer is a student
at Cornell University studying sustainable development, a leader of the
global youth climate movement, and a native of La Romana, Dominican
Republic.
To learn more about Romana Sostenible, please visit

www.romanasostenible.org.
Author’s Contact:
Carlos Rymer
US: 551-556-0189
DR: 809-272-2101
E-mail: carlos.rymer@gmail.com
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Table of Contents
Summary…………………………………………………………………….. 3
Renewable Energy Resolution………………………………………………. 4
Climate Change Risks……………………………………………………….. 6
The Global Renewable Energy Markets…………..………………………… 9
1. Biodiesel……………………………………………………………... 10
2. Biomass…………………………………………………………….... 11
3. Ethanol………………………………………………………………. 12
4. Hydro………………………………………………………………... 13
5. Solar…………………………………………………………………. 14
6. Wind…………………………………………………………………. 16
Government Incentives and Regulatory Framework……………………….. 18
1. Renewable Electricity……………………………………………….. 18
2. Renewable Fuels…………………………………………………….. 19
Status of the Private Sectors…………….………………………………...... 20
Costs and Benefits of Climate Neutral Target……………………………… 21
The Business Opportunity: Repeating History……………………………… 26
Acting Now To Secure 2030 Vision………………………………………… 27
1. Renewable Energy Capital Fund……………………………………... 27

2. Public-Private Training Program…………………………………….. 28
3. Renewable Energy Land-Use Assessment…………………………… 28
Conclusion…………………………………………………………………… 29
2
Summary
In the 21st century, perhaps the biggest challenge the world faces is
climate change. While climate change impacts are projected to continue
and become more severe, the Dominican Republic has the opportunity to
become independent of imported energy sources and to secure a
renewable energy economy that creates jobs, shows international
leadership, and promotes strong economic growth.
Recently, the government has made clear its support for a
renewable energy economy with passage of ground-breaking legislation
that provides incentives for a national shift towards secure, homegrown,
renewable energy sources. With these incentives, the private sector has
modestly begun to invest in this arena, securing long-term profits and
stability in energy prices. Now, the domestic and international private
sectors have a lucrative business opportunity.
This is a chance to enjoy of the incentives dominant sectors, such
as tourism, have had in the past, this time by joining the race to supply
the nation’s total demand with renewable energy. Using funds collected
from their total annual revenues and investment capital, the private
sectors can lead the nation into a climate neutral status by 2030 or earlier
with significant investments in renewable energy. The benefits of such
an opportunity far outweigh the costs, both to the private sectors and the
nation. This is a chance to secure strong job growth, lower and stable
energy prices, and a vibrant, growing Dominican economy.
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Resolution In Support of Renewable Energy

Investments
PREAMBLE
Renewable energies have an economic benefit and offer a unique opportunity for
countries like the Dominican Republic. Considering that their use benefits the
economy in the form of fossil fuel independence, reduced and stable energy prices,
and job creation, renewable energies should be promoted as much as possible.
With the global challenge of climate change, which can dramatically affect the
nation’s economy, the nation’s private sectors need to become lead by creating and
strengthening a renewable energy sector to help solve climate change and promote
economic growth.
CONSIDERING That climate change is a global problem that may pose dangerous
consequences for Dominican Republic’s economy, especially because of the risks
associated with dramatic sea level rise and increased storm damage risk;
CONSIDERING That climate change requires developed countries to lead globally

to reduce greenhouse gas emissions to levels at or below those that will prevent
warming above current projections, or the threshold level of 2C;
CONSIDERING That renewable energies have economic and environmental
advantages in the Dominican Republic, and that their development would benefit
the nation’s economy;
CONSIDERING That a renewable energy industry in the Dominican Republic
requires incentives and investments for its efficient, rapid development;
CONSIDERING That the Law for Incentives for the Development of Renewable
Energy Sources and their Special Regimes establishes incentives for the
development of renewable energies in the country;
CONSIDERING That the tourism, mining, manufacturing, and agricultural sectors

of the Dominican Republic are the most economically important and significantly
contribute to the nation’s economy;
CONSIDERING That the Hospitality sector depends on the stabilization of the

increase in the average global temperature to secure its continued growth;
4
CONSIDERING That strong action taken by developing countries serve as

significant examples for developed countries, some of which still do not show
significant commitment to preventing dangerous climate change; and
CONSIDERING That the private sector can and should lead in the fight against
climate change;
BE IT THEREFORE RESOLVED THAT:
The associations, companies, and non-profit organizations that undersign this
resolution call on the Dominican Republic’s private sectors to:
1. Recognize and affirm their responsibility to show leadership in the fight
against climate change and in the sustainable development of the Dominican
Republic;
2. Commit to allocating enough investments in renewable energies, beginning

in 2010, to help achieve coordinated goals of 50% renewable energy use by
2020 and climate neutrality by 2030.
BE IT FURTHER RESOLVED THAT:

This action will serve as a significant incentive for the rest of the world, especially
countries that contribute the most to climate change, to set similar targets to
prevent dangerous climate change;
This action will create a renewable energy industry in the Dominican Republic that
will provide significant economic benefits and hundreds of thousands of new jobs;
and
This action will, in the medium- to long-term, benefit the private sector, the
Dominican Republic, and the rest of the world.
Approved and Signed By:
Federación Nacional de Constructores (FENACO), HERSANCA C. Por A.,

HERVILL S.A., H.V. GLOBE C. Por A., ISOFOTON, ISOTECSOL S.A.,
Romana Sostenible, Técnicas Energéticas Solares S.A.
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Climate Change Risks

The science is now conclusive.
Climate change is largely caused by man- “Warming of the climate
system is unequivocal, as
made fossil fuel emissions and the
is now evident from
consequences of inaction will be severe to observations of increases
the global economy, if not catastrophic. The in global average air and
Intergovernmental Panel on Climate Change, ocean temperatures,
widespread melting of
the world’s authority on climate science, has snow and ice, and rising
affirmed in its Fourth Assessment Report global average sea level.”
that the increase in the global mean - IPCC 2007
temperature observed over the last few
decades is a main result of the increasing atmospheric concentration of greenhouse
gases resulting from fossil fuel combustion, agriculture, deforestation, and other
human activities. The observed increase in the global mean temperature of about
0.7C has already affected major biophysical systems, including glaciers, the
polar ice caps and ice sheets, mountain ecosystems, agricultural systems, ocean
systems, storms, and forests.1
The projections for the 21st century by the Intergovernmental Panel on

Climate Change include a rise in the global mean temperature of 1.8-4.0C; a rise
in sea level of 0.18-0.59cm; significantly lower snow cover; a dramatic decrease in
sea ice extent and complete disappearance during the summer months; significant
increases in thaw depths in permafrost regions; an increase in the frequency of hot
extremes, heat waves, and heavy precipitation; an increase in tropical storm
1
IPCC. 2007. Summary for Policymakers of the Synthesis Report of the IPCC Fourth Assessment Report.
UNFCCC.
6
intensity; precipitation increase in high latitudes and decrease in subtropical

regions; lower water availability in dry and semi-arid regions of the tropics and
mid-latitudes; and dramatically increased species extinction levels. These
biophysical impacts are expected to severely impact human health, agriculture,
coastal activities and infrastructure, and necessary natural resources.
More recent observations

have increased the likelihood of
significantly higher sea level rise.
In the summer of 2007, the U.S.
Snow and Ice Data Center
concluded that Arctic sea ice
extent was about 20% lower than
2006, increasing the likelihood
that Arctic summer sea ice could
disappear by 2020. Observations
from the Arctic Climate Impact Source: NASA
Assessment team also showed that the melting of the Greenland ice sheet was
accelerating and that crevasses were opening up, allowing water to drain to the
bottom of the ice sheet and lubricating it, which speeds up its movement towards
the ocean. The same was observed in the West Antarctic ice sheet by the British
Antarctic Survey. Together, these ice sheets have enough water to raise sea levels
by 12 meters. These new observations have outpaced the most recent predictions
and raised the possibility of sea level rising by up to 4 meters globally this
century.2
2
Brown, Lester R. 2007. Plan B 3.0: Mobilizing To Save Civilization. Norton, W. W. & Company, Inc.
7
In the Dominican Republic, as well as in other areas with significant coastal

tourism and cities, and agriculture, the impacts of sea level rise, increased storm
intensity, and drought will be very severe under moderate business-as-usual
greenhouse gas emissions scenarios. The country’s main tourist destinations are
mostly coastal (Boca Chica, Juan Dolio, Bayahibe, Bavaro, Punta Cana, Samana,
Las Galeras, Las Terrenas, Cabarete, Sosua, and Puerto Plata). Significant
agricultural and mining areas are highly vulnerable to heavy precipitation and
intense storms, as was seen recently with Tropical Storm Noel.
High sea level rise would severely damage the major tourism areas and cities
like Santo Domingo, San Pedro de Macoris, La Romana, Puerto Plata, and
Montecristi, and increased storm intensity would cause major agricultural failures
and mining problems in vulnerable areas. According to conservative estimates, the
world economy will likely suffer a loss of 15% of GDP per year by the end of the
century as a result of climate change.3 In the Dominican Republic, which is
expected to be severely impacted by sea level rise, more severe drought, and more
intense storms, the cost of climate change to the economy could be higher due to
the country’s particularly high vulnerability.
Climate change is likely the largest threat the Dominican economy faces
over the long term. Adapting to the effects of climate change to which we’re
already committed is important, but more important is ensuring that we minimize
the risks associated with climate change impacts on the economy. The only way to
accomplish that goal is to eliminate man-made greenhouse gas emissions.
Fortunately, the solutions to these are becoming mainstream around the world.
33
Stern, Nicholas. 2006. The Stern Review on the Economics of Climate Change. UK Treasury.
8
The Global Renewable Energy Markets

The renewable energy sector is one of the fastest growing globally. Interest
in renewable energy technologies have attracted increasing investments, which in
2007 reached over $100 billion from less than $40 billion in 2005.4 Technological
development, increased manufacturing of these technologies, and emerging
markets have allowed for strong growth in this industry, which comprises start-up
companies that lead the exchange markets for energy with the large number of
these that request an initial public offering every year.5 Not only are renewable
energy technologies being seen as the solutions to dangerous climate change, but
they’re also being perceived as excellent investment opportunities, job creators,
and drivers of economic growth. The graph below shows the tremendous growth in
renewable energy investments over the last decade.
Source: Renewable Energy Policy Network for the 21st Century
4
Renewable Energy Policy Network for the 21st Century. 2007. Renewables 2007: Global Status Report.
WorldWatch Institute.
5
Floyd, Nancy. 2007. Speech at the 2007 Renewable Energy Financial Forum – Wall Street. American Council on
Renewable Energy. Available at: http://www.acore.org/reff/2007/txt/d1s5_floyd.php.
9
Biodiesel
Biodiesel is an alternative fuel produced from a renewable resource –

vegetable oil – and with little price fluctuations as compared to petrodiesel, the
petroleum-derived product widely used around the world. Biodiesel can be blended
in any quantity with petrodiesel and used in any diesel-compatible engine. A blend
of 5% or 20% is typically used initially to ensure proper performance. However,
studies have confirmed that 100% biodiesel is perfectly usable as a full substitute
to petrodiesel.6
Biodiesel also reduces carbon dioxide and other polluting emissions by more
than 70%, according to a study conducted by the U.S. Departments of Agriculture
and Energy. The fuel has also been found to improve engine performance and
lifetime, giving significant benefits to users.7 Today, it is typically produced from
corn, palm oil, rapeseed, and soybean, but new feedstocks are increasingly being
used as well, including algae, Jatropha, and waste cooking oil. The production
costs range from a low of $1.00 per gallon to a high of over $3.00 per gallon.
Globally, approximately 2 billion gallons of biodiesel was produced in 2007.

Almost 85% of biodiesel in the world is both produced and consumed within the
European Union, which is due to legislation that requires that region to consume
increasing amounts of renewable fuels to meet the targets of the Kyoto Protocol, an
international treaty binding most industrialized nations to reducing their
greenhouse gas emissions. Currently, only about 7% of the world’s biodiesel is
produced outside of either the European Union or the United States, leaving very
6
Canadian Renewable Fuels Association. Biodiesel FAQ. http://www.greenfuels.org/biofaq.php. Last Accessed:
September 16, 2007.
7
National Biodiesel Board. 2007. Biodiesel Basics. http://www.biodiesel.org/resources/biodiesel_basics/. Last
Accessed: November 12, 2007.
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little competition in the developing world.8 The figure below shows the growth in
biodiesel production in the period 2000-2005:
Biomass
Biomass is a primary source of energy for over 2 billion people around the
world. It is easily available for the world’s poor and meets critical cooking and
heating needs. In the best cases, biomass can be harvested sustainably to secure
long-term supply and jobs. Biomass is derived from plant products, and can readily
be used as a source of energy when burned or can be collected in large amounts for
large-scale power production.
In 2001, biomass energy accounted for 11% of the world’s total energy
consumption, according to 2003 International Energy Agency’s energy status
report. The regions with a large share of energy consumption derived from biomass
are Africa, Asia, and Latin America. As a share of total renewable energy use,
8
Renewable Energy Policy Network for the 21st Century. 2007.
11
biomass accounts for more than half, with a large portion not going to
transportation or electricity generation. Global biomass use is not expected to grow
significantly over the next decade.9
Ethanol
Ethanol is an automotive fuel derived from several plant products and other
materials. It is an alternative to petroleum-derived gasoline and is increasingly
being used around the world. It is typically derived from such feedstocks as sugar
cane, corn, soybeans, and plant cellulose. Ethanol can be blended with gasoline
and run on flex-fuel vehicles, which run on both gasoline and ethanol. Total world
output of ethanol is growing rapidly due to particularly high oil prices.
Globally, Brazil has led ethanol production since the 1970s, when the
government began pushing large-scale production in response to high oil prices.10
The United States, which recently passed legislation that requires ethanol output
increases rapidly, is also a major ethanol producer, although its market is
experiencing criticisms due to food substitution for fuel and market price
fluctuations due to an oversupply. The graph below shows the total ethanol output
globally and by major ethanol producers. In 2007, about 44 billion liters of ethanol
were produced globally with prices in the range of $1.50 and $3.00.11
9 Karekezi, Stephen; Lata, Kusum, Coelho, Suani T. 2004. Traditional Biomass Energy: Improving its Use and
Moving to Modern Energy Use. International Conference for Renewable Energies, Bonn.
10
Moreira, Jose R. y Goldemberg, Jose. 1999. El Programa de Alcohol. Energy Policy 27: 229-245.
11 Renewable Energy Policy Network for the 21 st Century. 2007.
12
Hydro
Hydropower is electricity derived directly from the force of running water.

Most of the world’s major rivers have been dammed to produce electricity from
hydropower. Historically, it has been a very important source of electricity. Many
regions of the world greatly depend on hydropower, both small- and large-scale, to
meet its energy needs. While large hydropower has significant negative
externalities (flooding, change in water flow dynamics, and other impacts), small
hydropower has large potential for growth and is an important contributor to
meeting energy needs.
13
In 2005, hydropower represented

87% of all renewable power production
globally. Most of that capacity comes from
large hydro. As shown in the graph to the
right, there is still a lot of potential for
expanded hydropower capacity, particularly
in Asia, where large hydropower projects
have been developed or are currently in the
planning or construction stages.12 The
Source: World Energy Council, 2007
future of generating power from sustainable
hydro is bright, but considerable efforts and appropriate policies to reduce
environmental and human impacts are
required.
Solar “I’d put my money on the

sun and solar energy.
Solar energy is one of the most What a source of power! I
promising sources of energy due to its hope we don’t have to
wait until oil and coal run
abundance. Solar energy specifically relates
out before we tackle that.”
to energy converted from sunlight to
- Thomas Edison,
electricity or heat for human use. There are 1931
various solar energy technologies, prominent
among them solar photovoltaic, solar thermal heating, and solar thermal power.
According to the World Energy Assessment, published by the World Energy
Council and divisions of the United Nations, there is enough solar energy to power
12
Zupanc, N. et al. 2007. 2007 Survey of Energy Resources. World Energy Council.
14
the world several times over. Appropriate technological development could spur
solar energy to become the main source of energy for society.
In 2007 alone, the total installed capacity grew from 7.5GW to 11.6GW. The
market for solar photovoltaic is growing at 50-60% per year, and emerging markets
are opening up opportunities for further growth.13 Countries of strong development
include California and other U.S. states, Germany, Japan, and most recently China
and Spain. In terms of prices for solar electricity, they range between $0.15-0.30
per kW-hr, with some new technologies and improved market structure promising
to cut costs by 40-60% within the next few years.14 The graph below shows the
growth in total installed capacity globally for solar photovoltaic.
13
14
Division of Energy Efficiency and Renewable Energy. 2006. DOE Solar Energy Technologies Program:
Overview and Highlights. U.S. Department of Energy.
15
Solar thermal heating is also on the rise. In 2007, it grew from 103 in 2006
to 121 GWth, particularly with the expanding Chinese market.15 Solar thermal
power has been growing more slowly, but may prove to be much more promising.
Emerging companies are developing manufacturing plants and improving the
technology to quickly deploy solar thermal power. In the United States, for
example, companies are working to build large solar thermal power plants in the
sunny deserts to generate over 1GW of capacity over the next few years at current
market prices.16
Wind
Wind energy is electricity generated from the wind using modern

technology. Wind turbines, both onshore and offshore, convert the force of wind
into electricity that can be distributed to consumers. This technology has more than
20 years in development and its market is growing rapidly around the world. Since
its use in Europe for extracting underground water, wind technology has improved
dramatically in terms of efficiency and cost.17
By large, wind energy receives the largest share of investments in renewable

energy annually, growing at a rate of around 30% per year. In 2007, the total
installed global capacity increased to 93GW from 74GW, with costs ranging from
$0.04-0.08 per kW-hr.18,19 As with all other renewable energy technologies, wind is
enjoying of an emergence of new markets that are providing key incentives for its
deployment. It is widely expected that wind energy will meet a substantial portion
15
16
Press Release. 2007. FPL Group plans to boost U.S. solar energy production. Available at:
http://www.fplgroup.com/news/contents/2007/092607.shtml.
17
Teske, Sven, y Zervos, Arthouros. 2006. Global Wind Energy Outlook 2006. Global Wind Energy Council.
18
19
UN Development Program. 2004. World Energy Assessment. United Nations.
16
of global electricity demand by mid-century just with current incentives. The graph
below shows the increasing growth of global installed capacity for wind energy.
17
Government Incentives and Regulatory Framework
In May 2007, the Dominican government passed the Law for Renewable
Energy Incentives and Special Regimes, the first of its kind in all of Latin
America. The law makes the Dominican Republic a hotspot for renewable energy
investments, and hopes to alleviate the country’s energy problems over the long
term. Among the main provisions are a feed-in tariff modeled after Germany’s and
the exemption from all taxes.
Renewable Electricity
The renewable energy law creates the appropriate regulatory framework and
incentive opportunities for the deployment of large-scale renewable energy
technologies that generate electricity. Below are the key provisions of the law for
companies, cooperatives, associations, and any other body wishing to invest in
renewable electricity production within the country:20
 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;
20
El Congreso Nacional. 2007. Ley No. 57-07 de Incentivo a las Energias Renovables y Regimenes Especiales.
Republica Dominicana.
18
 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 renewable

sources by 2010 and that at least 25% of electricity demand is met by
renewable sources by 2025.
Renewable Fuels
Similarly, the renewable energy law creates the appropriate regulatory

framework and incentive opportunities for all biofuels. Below are the key
provisions of the law pertaining specifically to the development of a biofuels
industry:
 Exemption from all taxes as with electricity, except for such cases where
biofuels are exported but not produced using local resources. Tax
exemptions will also expire and be subject to renewal once biofuels meet
20% of national demand in each of the different biofuel markets;
 A feed-in tariff similar to the one used for electricity producers; and
 A requirement that all petrofuels vendors take any biofuel produced within
the country for sales.
19
Status of the Private Sectors
In the Dominican Republic, agriculture has largely been the dominant sector
in the country for a long time. In the 20th century, however, the economy
diversified dramatically to include mining, manufacturing (including local),
tourism, and other services. Together, these sectors make up virtually 100% of the
gross domestic product (GDP).
In 2006, tourism and travel in the Dominican Republic generated an

estimated demand of about $8.14 billion and may grow over the next decade by
4.2% per year. The sector contributed about 21.3% to GDP in 2006 and was
responsible for 656,000 total jobs, which was about 18.4% of total employment. It
also was responsible for 37.9% of total exports and $1.4 billion, or 42%, in total
capital investments.21 Other services, including transportation and
telecommunications, contributed 38.5% to GDP.
The industry sector, which includes sugar refining, pharmaceuticals, cement,

construction, mining, free zone textile manufacturing, and other exports,
contributed 28.6% to the GDP in 2006, while agriculture contributed 11.6%. In
total, these sectors employ about 84% of the total labor force and accounted for
over $3.3 billion in investments in 2006.22 The performance of these sectors,
particularly telecommunications and tourism, has led the country’s economy to
grow at very high rates in the last few years.
21
2006. Dominican Republic: Tourism and Travel Economic Research Team. World Travel and Tourism Council.
22
World Factbook. 2007. CIA. Available at: http://www.cia.gov.
20
Costs and Benefits of Carbon Neutral Target
According to the National Commission on Energy (CNE), there are over $2

billion in investments for renewable energies in projects under review totaling
some 1600MW of electric capacity and several ethanol plants that will produce
millions of gallons annually. The Dominican government also has plans to install
over 700MW of hydro capacity in the next few years, which will generate over
14,000 new jobs.23 These investments already make the carbon neutral target,
where national greenhouse gas emissions are zero or negative, much more feasible.
A relatively quick transition to a renewable energy based economy will

clearly take substantial investments to study where to best tap into renewable
resources of energy, design and begin new ventures and financial mechanisms, and
deploy the various renewable energy technologies. Under any scenario, of course,
there will be a mix of sources to power the country fully. These will largely be
biodiesel, ethanol, hydro, solar, and wind (as well as some storage technologies).
Any other technologies, such as tidal and ocean energy, may come into use if they
are further developed. Here, we use conservative estimates for the investment costs
of these various technologies under two different mix scenarios and the benefits to
consumers and investors given the current government incentives.
In the next two decades, demand will grow substantially due to economic
growth. By the year 2030, it is assumed that total electricity demand will grow at
the historical rate of 500 GW-hr per year to about 25,000 GW-hrs.24 By the same
year, it is assumed that total fuel demand for transportation and other non-grid uses
23
Empresa de Generacion Hidroelectrica Dominicana. 2006. Plan de Expansion 2006-2012. CDEEE.
24
From 1990 to 2005, total electricity demand grew by about 7,500 GW-hrs, according to the Corporacion
Dominicana de Empresas Electricas Estatales. Total demand in 2007 was about 13,500 GW-hrs.
21
will grow at the same historical rate for electricity of about 3% per year to 1.9
billion gallons.25 The table below summarizes these values.
Projected Energy Demand26

Electricity Demand (GW-hrs) Fuel Demand (gallons)
2007 13,500 950,000,000
2030 25,000 1,900,000,000
In the first scenario, the mix of electricity sources is as follows: 40% solar
thermal power; 30% onshore wind, 20% hydro, and 10% solar photovoltaic. The
mix for fuel sources is as follows: 100% ethanol as a gasoline substitute and 100%
biodiesel as a petrodiesel substitute. In the second scenario, the mix of electricity
sources is as follows: 40% solar thermal power, 20% onshore wind, 20% hydro,
10% photovoltaic, 5% offshore wind, and 5% marine. Ethanol and biodiesel shares
remain equal. The difference in these scenarios is the application of offshore wind
and marine energy technologies, which are still in development but are very
promising. The tables below summarize the capacity factors for these technologies,
their required installed capacities under each scenario, the estimated revenues
under actual production costs, and the required investments.
25
This is the future value of demand at a growth rate of 3% (for electricity sector) and with a present value of 620
million gallons of fuel. This includes diesel, gasoline, and liquefied petroleum gas.
26
These estimates exclude any significant efforts to dramatically increase energy efficiency and reduce demand.
22
Capacity Scenario 1 Capacity Scenario 2 Capacity

Factor (%)27
Biodiesel N/A 650,000,000 gallons 650,000,000 gallons
Ethanol N/A 1,250,000,000 gallons 1,250,000,000 gallons
28
Hydro 55 1.04GW 1.04GW
Marine Energy 30-70 N/A 285MW
Solar 25 1.2GW 1.2GW
Photovoltaic
Solar Thermal 3029 3.8GW 3.8GW
Storage N/A 1GW 1GW
Wind 30 2.9GW 2.4GW
Estimated Average Cost per Annual Market

Investment Unit Revenues30 (2030)
Biodiesel $500 million $1.0-1.6/gallon $850 million
Ethanol $4.5 billion31 $1.2-1.6/gallon $1.75 billion
Marine Energy $870 million $0.04-0.10/kW-hr $87.5 million
Offshore Wind32 $550 million $0.03-0.05/kW-hr $50 million
Onshore Wind $3.4 billion $0.04-0.08/kW-hr $450 million
Solar $2.4 billion $0.05-0.15/kW-hr $250 million
Photovoltaic
Solar Thermal $7.6 billion $0.05-0.10/kW-hr $750 million
Storage $1 billion33 0.02/kW-hr Variable
Sources: World Energy Council, Intellexi S.A., U.S. Department of Energy, U.S.
National Renewable Energy Laboratory, Electric Power Research Institute,
Australian Institute of Energy
27 World Energy Council. 2004. World Energy Assessment: 2004 Update. UNDP and World Energy Council.
28
There is a total installed capacity of 460MW today, with 750MW in the pipeline.
29
With new, cheaper storage technologies, the capacity factor for some companies has doubled.
30
Given potential future costs and an absence of government incentives.
31 Based on a recent investment made in the Dominican Republic by Infinity Bioenergy.
32
Capacity factor for offshore wind is about 45%.
33
Better energy storage is currently in development, so costs are expected to decrease. In addition, this is an
estimated capacity, not a confirmed capacity based on intermittency. Government support may supply storage in the
future if necessary.
23
As the tables above show, by 2030 the Dominican Republic will require a
total installed renewable energy capacity of nearly 6GW, will likely need some
capacity for energy storage, and will need to supply about 650 million gallons of
biodiesel and 1.25 billion gallons of ethanol annually.34 This will require a total
investment of about $18 billion over 20 years beginning in 2010 ($900 million per
year, or 27% of 2006 total investments), excluding energy storage investment
costs. This investment will directly represent 7% of gross domestic product in 2030
under a constant 5% growth rate. On the other hand, the economic benefits to both
consumers and producers will be substantial. The tables below show the potential
consumer savings, economic profits (in terms of return on investment rates), and
jobs created due to these investments.
Consumer Savings
Electricity Fuels
Renewable Energy Market $0.09/kW-hr $1.4/gallon
Price35 (2030)
Business-as Usual Market $0.15/kW-hr $3/gallon37
Price36 (2030)
Total Annual Savings (2030) $1.5 billion $3 billion
Total Accumulated Savings $12.4 billion $24.75 billion39
(2020-2030)38
34
According to the National Energy Commission, about 550,000 hectares of land is available for sugarcane
production (350,000 existing). At a conservative estimate of 7000 liters/hectare, this is enough to produce 1.4 billion
gallons of ethanol. Issues related to sugar production will be present, however, requiring improvements in vehicle
efficiency and public transportation to reduce ethanol and biodiesel demand.
35
To distributors.
36
Excludes increasing oil and natural gas prices and new coal without CO2 capture and storage.
37
Assumes 40% petroleum liquid gas, 34% diesel, 20% gasoline, and 6% premium gasoline, given a push for higher
natural gas and diesel use.
38 Assuming incentives expire in 2020.
24
Unit Margin ROI New Unit New Jobs Created by

40
(no incentives) Margin (with ROI 203042
incentives)41
Biodiesel $0.10/gallon 13% $1.8/gallon
230% 325,000
Ethanol $0.45/gallon 13% $1.6/gallon
44% 300,000
Onshore $0.05/kW-hr 10% $0.20/kW-hr
45% 6,000
Wind
Solar $0.09/kW-hr 9.5% $0.20/kW-hr 21% 84,000
Photovoltaic
Solar 0.06/kW-hr 8% $0.20/kW-hr 26% 266,000
Thermal
Sources: Industry Statistics for Brazil, Canada, and the EU
As these graphs show, consumers would potentially save a total of $37

billion as compared to business-as-usual by 2030 as a result of private investments
made to reach carbon neutrality. This large sum of savings would flow across the
economy to produce more goods and services, increasing the economic growth rate
substantially. In addition, investors would enjoy of return on investment rates of
between 25-45%, with substantially higher rates for biodiesel investors (up to
230%), at least until 2020. These elevated rates of return would allow for high
growth rates in new businesses, incentivizing innovation and regional technology
exports, which would further create economic value to the country. Attaining this
goal would ultimately result in the creation or protection of nearly 1 million jobs,
with a significant portion of these being high-paying jobs. There is no doubt that
40
According to the U.S. Department of Energy and Industry Associations, O&M costs are about $0.01-0.015/kW-hr,
$1.2/gallon, and $0.85/gallon for renewable electricity, biodiesel, and ethanol.
41
The compensation values for each renewable energy technology have not yet been issues by the National
Commission of Energy. However, to be conservative, 50% of the average premium given in Germany to renewable
energies was given here to each renewable energy technology. For the fuels, no premium values were set.
42
A large portion, sometimes up to 50% of these jobs are protected rather than created. Numbers are based on
Brazilian, Canadian, and European industry statistics.
25
deploying these proven technologies under the regulatory framework offered by

the Dominican government will result in a private-public win-win outcome.
The Business Opportunity: Repeating History
In the late 1960s, tourism in the Dominican Republic took off with the
passage of legislation that gave tourism businesses tax breaks and other
government incentives in the form of infrastructure.43 Tourism investments
increased dramatically, making the country a key destination for tourists from
many regions around the world. Today, tourism hotspots like Casa de Campo,
Punta Cana, Las Terrenas, Boca Chica, and Puerto Plata are well-known
internationally and contribute greatly to employment and economic activities.
Similarly, the free trade zones experienced significant growth after

legislation in 1990 eliminated all taxes and a foreign investment law was enacted
in 1995. Investments in Dominican free trades increased, making the nation 5th in
Latin America in free trade zones exports. Today, there are 53 industrial parks with
more than 500 companies. The free trade zones contribute 200,000 permanent jobs
and in 2002 had exports valued at $4.6 billion. Clearly, government incentives in
this sector led its growth and success.44
In the first decade of the 21st century, we face the challenges of climate
change and energy security. We’ve long been dependent on foreign sources of
energy, and now the energy bill is becoming larger year by year, with serious
effects to economic growth. The Dominican Republic has shown its capacity to
create dynamic economic sectors. Now, with landmark renewable energy
43
El Congreso Nacional. 1966. Ley No. 541 Organica de Turismo de la Republica Dominicana. Republica
Dominicana.
44
Asociacion Dominicana de Zonas Francas. 2003. Website available at: http://www.adozona.org/esp/default.asp.
26
legislation, it is time to create a dynamic renewable energy industry that will create
and protect jobs, reduce and stabilize energy prices, strengthen economic growth,
and show real leadership on climate change through carbon neutrality.
Acting Now To Secure 2030 Vision
At a time of high energy insecurity due to international oil prices and of

increasing climate change impacts, the creation of a renewable energy industry is
essential. With no taxes, a feed-in tariff, and a blossoming global renewable energy
industry, the Dominican Republic is suddenly highly attractive for renewable
energy investments. By 2030, we can achieve carbon neutrality, have lower and
stable energy prices, employ nearly 1 million citizens in a strong, competitive
industry, and greatly improve the quality of life of all Dominicans and citizens of
the Caribbean region. This is the need of our time – the business opportunity.
Renewable Energy Capital Fund
Currently, investments in renewable energies are flowing into the

Dominican Republic by foreign companies or investors. Typically, these
investments are specialized to a certain technology, leaving behind any potential in
other technologies in which teams of experts or smaller businesses may have an
advantage. For the purpose of quickly pooling the required capital to rapidly
deploy renewable energy technologies, a private equity fund is ideal.
Such a fund is managed by recognized capital fund entrepreneurs, and

typically locks in investments for a long period of time (5-10) years or until a goal
is achieved, such as an initial public offering or a leveraged buyout or a merger.
The advantages of private equity funds involve high return rates (up to 40%, and
even over 200% for biodiesel in this case) and the pooling of enough capital to
27
fund businesses that will be highly successful in this field. Therefore, a Renewable
Energy Capital Fund based on private equity could potentially generate the
investment capital over the years to produce a strong renewable energy industry.
One excellent example of a private equity fund is the Englefield Renewable

Energy Fund. Recently founded in Western Europe, the fund focuses on wind
energy and manages $200 million. Already a co-owner of the largest portfolio of
wind farms in the United Kingdom, the Englefield Renewable Energy Fund will
help finance wind projects in Western Europe with proven technologies.45 Such
funds exist around the world. Many are large and highly diversified, while others
are small and very specific. With expected average return rates of 30%, an initial
Renewable Energy Capital Fund should begin with capital worth some $3 billion.46
Public-Private Training Program
In order to maximize labor productivity, a training program will be required

for the new, high-tech jobs that will be created. The private companies investing in
renewable energies must set up a partnership with the Dominican government to
create training centers and curricula at the nation’s universities and institutes with
the goal of ensuring that Dominicans are ready to enter this new industry.
Renewable Energy Land-Use Assessment
Finally, to avoid conflicts with land acquisition and potential competition for
land use, the private sector must work with the government to assess all the areas
where renewable energy technologies can be deployed and feedstocks for biofuels
can be grown. This information would be best put to use if it were publicly
45
Renewable Energy Stocks. 2007. Available at:
http://www.renewableenergystocks.com/Companies/RenewableEnergy/Funds-and-Venture-Capital-Investing.asp.
46
With $900 million required in investments per year and return rates of 30%, $3 billion is the necessary initial
amount of capital required to sustain continued investments.
28
available and if land under private ownership but open to use were also placed on a
geographic information system based tool. Ideally, this would be accompanied
with a database of government and private contacts for available lands.
Conclusion
Climate change is perhaps the most significant long-term threat to the

Dominican Republic’s economy. Avoiding catastrophic climate change will
require the rapid elimination of greenhouse gas emissions to reduce the chances of
tipping points in the Earth’s climate system. The world now has the necessary
technologies, human capital, and institutional capacity to rapidly deploy renewable
energy technologies. Real leadership must come from the developed world, but the
problems of energy security, the prospects of job creation and economic growth,
and the need for public and private pressure are key aspects of developing a
renewable energy industry that will make the Dominican Republic and perhaps the
greater Caribbean region carbon neutral.
With landmark legislation that removes taxes, puts in place a feed-in tariff,
and provides other lucrative incentives, a renewable energy industry is set to
explode in the Dominican Republic. Current incentives are set to last at least 10
years, providing annual return on investment rates of between 20-45%, and higher
rates in some cases. The potential to develop high-growth business is clearly
present. In order to reach the goal of carbon neutrality, an investment of $18 billion
may be required by 2030. Consequently, consumers will potentially save over $30
billion by 2030, economic growth will be significantly bolstered, and nearly 1
million jobs will be created or permanently protected.
29
A renewable energy capital fund or several private equity funds would

ideally help quickly deploy renewable energy technologies. Finally, a private-
public partnership to provide extensive trainings for new jobs and a comprehensive
land-use assessment would aid the creation of new renewable energy businesses.
Renewable energy is now the business opportunity. Let’s seize it!
30

Renewable Energy: A Business Opportunity For The Private Sector in The Dominican Republic

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High Employment • Affordable Energy • Climate Neutrality • Strong Economy

Renewable Energy: A Business

A Call for National Private

About Romana Sostenible

The author of this report, Carlos Rymer, is the Renewable Energy

To learn more about Romana Sostenible, please visit

Renewable Energy Resolution………………………………………………. 4

Climate Change Risks……………………………………………………….. 6

The Global Renewable Energy Markets…………..………………………… 9

Government Incentives and Regulatory Framework……………………….. 18

Status of the Private Sectors…………….………………………………...... 20

Costs and Benefits of Climate Neutral Target……………………………… 21

The Business Opportunity: Repeating History……………………………… 26

Acting Now To Secure 2030 Vision………………………………………… 27

1. Renewable Energy Capital Fund……………………………………... 27

Resolution In Support of Renewable Energy

CONSIDERING That climate change requires developed countries to lead globally

CONSIDERING That the tourism, mining, manufacturing, and agricultural sectors

CONSIDERING That the Hospitality sector depends on the stabilization of the

CONSIDERING That strong action taken by developing countries serve as

2. Commit to allocating enough investments in renewable energies, beginning

BE IT FURTHER RESOLVED THAT:

Approved and Signed By:

Federación Nacional de Constructores (FENACO), HERSANCA C. Por A.,

Climate Change Risks

The projections for the 21st century by the Intergovernmental Panel on

intensity; precipitation increase in high latitudes and decrease in subtropical

More recent observations

In the Dominican Republic, as well as in other areas with significant coastal

The Global Renewable Energy Markets

Source: Renewable Energy Policy Network for the 21st Century

Biodiesel is an alternative fuel produced from a renewable resource –

Globally, approximately 2 billion gallons of biodiesel was produced in 2007.

Source: Renewable Energy Policy Network for the 21st Century

Source: Renewable Energy Policy Network for the 21st Century

Hydropower is electricity derived directly from the force of running water.

In 2005, hydropower represented

Solar “I’d put my money on the

Source: Renewable Energy Policy Network for the 21st Century

Wind energy is electricity generated from the wind using modern

By large, wind energy receives the largest share of investments in renewable

Source: Renewable Energy Policy Network for the 21st Century

Government Incentives and Regulatory Framework

 Exemption from all taxes on imported equipment, sales (including

 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

 Low-interest financing for up to 75% of the total cost of community or

 A requirement that at least 10% of the electricity demand is met renewable

Similarly, the renewable energy law creates the appropriate regulatory

Status of the Private Sectors

In 2006, tourism and travel in the Dominican Republic generated an

The industry sector, which includes sugar refining, pharmaceuticals, cement,

Costs and Benefits of Carbon Neutral Target

According to the National Commission on Energy (CNE), there are over $2

A relatively quick transition to a renewable energy based economy will

Projected Energy Demand26

2007 13,500 950,000,000

2030 25,000 1,900,000,000

Capacity Scenario 1 Capacity Scenario 2 Capacity

Estimated Average Cost per Annual Market

Unit Margin ROI New Unit New Jobs Created by

As these graphs show, consumers would potentially save a total of $37