Electricity supply and demand
Installed capacity
Electricity generation in the Dominican Republic is dominated by thermal units fired mostly by imported oil or gas (or liquefied natural gas). [2] At the end of 2006, total installed capacity of public utilities was 3,394 MW, of which 86% was fossil fuels and 14% was hydroelectric. The detailed share for the different sources is as follows: [3]
The large coal-fired Punta Catalina power plant has been accused of causing considerable soil, water and pollution, reportedly affecting the health and livelihoods of local residents. [4]
| Source | Installed capacity (MW) | Share (%) |
|---|
| Steam turbines | 606.2 | 17.9% |
| Gas turbines | 572.7 | 16.9% |
| Combined cycle | 804 | 23.7% |
| Fuel oil engines | 912 | 26.9% |
| Diesel oil engines | 30 | 0.9% |
| Hydroelectricity | 469.3 | 13.8% |
Source: Electricity Superintendence Statistics, 2006
Total electricity generated in 2006 was 10.7 TWh. [3] Generation experienced a 7.7% annual increase between 1996 and 2005. However, between 2004 and 2006, there has been an average annual decrease of about 10% in total electricity generated., [3] [5]
Planned expansion
Currently, there are plans for the construction of two 600MW coal-fired plants, Montecristi and Azúa, by the private sector. It is also expected that, by 2012, an additional 762MW of hydroelectric capacity will have been added to the generation system. The first three hydropower plants with a combined capacity of 240MW are:
- Pinalito with 50 MW on the Rio Tireo and the Rio Blanco,
- Palomino with 99 MW at the confluence of the rivers Yaque Del Sur and Blanco, and
- Las Placetas with 87 MW, involving an inter-basin transfer from the Rio Bao to the Rio Jaguá
The two first plants are already under construction. [6]
Alternative sources for self-generation
As a response to the electricity supply crisis (see The crisis below)., many consumers turned to alternative self-generation units such as small diesel generators, inverters, kerosene lamps or large power generators (for large industrial consumers). [1] It is estimated that total installed capacity in 2006 was 5,518MW, which means that self-generation accounted for about 2,214MW, equivalent to 63% of the 3,394MW total capacity of public utilities and 38% of total installed capacity. [7] The costs associated with this self-generation capacity are very high as they include equipment purchase, maintenance and fuel supply. This affects the residential, commercial and industrial sectors. For the latter, about 60% of its electricity consumption is self-generated. [1]
Demand
Electricity demand in the Dominican Republic has grown considerably since the early 1990s, at a yearly average of 10% between 1992 and 2003. Consumption is very close to the regional average, with annual per capita consumption of 1,349 kWh in 2003. [1] Total electricity sold in 2005 was 3.72 TWh. [8] Demand has constrained supply (see The crisis below), which in turn is limited by subsidies (see subsidies below)
In 2001, the share of each sector in the electricity sold by the three distribution companies (EdeNorte, EdeSur and EdeEste) was as follows: [9]
- Residential: 44%
- Commercial: 10%
- Industrial: 30%
- Public: 16%
Demand projections
Annual demand increase has been estimated at about 6% for the upcoming years. [10]
Responsibilities in the electricity sector
Policy and regulation
The National Energy Commission (Comisión Nacional de la Energía, CNE) is the policy agency, one of its main responsibilities being the elaboration of the National Energy Plan. The CNE presented in 2004 the National Energy Plan for the period 2004-2015 as well as the Indicative Plan of Electricity Generation (PIEGE) for the period 2006-2020.
The Electricity Superintendence (Superintendencia de Electricidad, SIE) is the regulatory agency, while the Coordination Agency (Organismo Coordinador, OC) was created to coordinate dispatch of electricity.
The Dominican Corporation of State Electricity Companies (Corporación Dominicana de Empresas Eléctricas Estatales - CDEEE) is a holding company that brings together all government-owned generation, transmission and distribution companies and associated government programs in the country. It consists of:
- the Hydroelectricity Generation Company;
- the Electricity Transmission Company, ETED;
- the Rural and Suburban Electrification Unit, UERS;
- the Blackout Reduction Program, PRA;
- 50% of the North Distribution Company, EdeNorte;
- 50% of the South Distribution Company, EdeSur; and
- the 50% government holding of the East Distribution Company, EdeEste.
EdeNorte and EdeSur are entirely government-owned, the remaining 50% shares being held by the government's Enterprise Trust Fund, Fondo Patrimonial de las Empresas (FONPER). EdeEste is a mixed private-public company. [12]
Generation
86% of generation capacity is privately owned (excluding self-generation), and 14% is publicly owned. Generation capacity is shared among the different companies as follows:
| Company | Generation capacity (MW) | Share (%) | Geographic areas (North, South, East) |
|---|
| Haina (private) Basic Energy Ltd. | 663.3 | 19.5% | N, S, E |
| Itabo (private) | 630.5 | 18.6% | N, S, E |
| Hydroelectricity (public) | 469.3 | 13.8% | N, S |
| Independent Power Producers (IPPs) (private) | 515 | 15.2% | N, S, E |
| Unión Fenosa (private) | 194.5 | 5.7% | N |
| CEPP (private) Basic Energy Ltd. | 76.8 | 2.3% | N |
| Transcontinental Capital Corp. (private) | 116.3 | 3.4% | S |
| Monte Rio (private) | 100 | 2.9% | S |
| AES (private) | 555 | 16.4% | E |
| Metaldom (private) | 42 | 1.2% | S |
| Laesa (private) | 31.4 | 0.9% | N |
| TOTAL | 3,394.1 | | |
|---|
Source: Electricity Superintendence Statistics
Transmission
The transmission system, which is under the full responsibility of the state-owned company ETED (Electricity Transmission Company), [13] consists of 940 km of 138kV single-line circuit lines that radiate from Santo Domingo to the north, east, and west.
Distribution
In the Dominican Republic, there are three distribution companies. The government owns two of them, EdeNorte and EdeSur, through the CDEEE (50%) and the Fondo Patrimonial de las Empresas (FONPER). It also maintains a 50% ownership of the third one, EdeEste, (the additional 50% is owned by the Trust Company of the West (TCW) which is operated by AES Corporation, its original buyer. The three companies serve a similar share of the market. [13]
Renewable energy resources
As it has been described, most electricity generation in the Dominican Republic comes from thermal sources. Only 14% of the installed capacity is hydroelectric, with this percentage falling to below 9% when all the thermal self-generation is accounted for. The exploitation of other renewable resources (i.e. solar, wind) is very limited. However, this situation is expected to change following the enactment of in May 2007 of the Law of Incentives to Renewable Energy and Special Regimes (Law No. 57-07). Among other incentives, this law establishes financing at favorable interest rates for 75% of the cost of equipment for households that install renewable technologies for self-generation and for communities that develop small-scale projects (below 500 kW).
Hydroelectricity
As it has been mentioned, Egehid's expansion plan contemplates the addition of 762MW of hydroelectricity capacity in the period 2006-2012. According to CDEEE, the first of the new series of dams and hydropower plants - Pinalito - is a "model of environmental management", with only 12 families resettled and extensive reforestation. [14]
Wind
A 2001 study estimated that the Dominican Republic had a wind generation potential of 68,300GWh per year, equivalent to more than six times its current power production. [9]
Solar
In March 2016, the 33.4 MW Monte Plata solar plant came online. The farm consists of 132,000 photovoltaic panels. It was built by Soventix Caribbean (www.soventix.energy), and there will be a proposed second phase consisting of 270,000 photovoltaic panels that would double the size of the plant to 69 MW. [15]
In August 2018, the 57.98 MW solar park Montecristi Solar started its energy injection to the grid, and became the largest solar farm in the Caribbean with 214,000 photovoltaic panels. A second phase is planned to double the capacity to 116 MW and becoming the largest photovoltaic power plant in the Caribbean and Central America. [16] [17] [18]
Tariffs and subsidies
Tariffs
Electricity tariffs in the Dominican Republic are among the highest in the Latin American and Caribbean region. This is due to several factors: reliance on imported oil, weak institutional environment, difficulties to pursue large non-payers, high prices originally negotiated in power purchase agreements with the generators, high commercial risks faced by generators such as non-payment or delayed payment by the distribution companies and/or the government, low cash recovery index (CRI), and high operating costs in the distribution companies. [1]
The country's policy of cross-subsidizing residential tariffs by disproportionate increases in commercial and industrial tariffs translates into higher rates for industrial and commercial consumers compared to residential consumers. [1] In 2007, the average residential tariff was US$0.160 per kWh (LAC weighted average was US$0.115 in 2005), while the average industrial tariff was 0.230 (LAC weighted average was US$0.107 per kWh in 2005) [8] and the average commercial tariff was as high as US$0.290 per kWh. [21]
Subsidies
Electricity subsidies are estimated to exceed US$ 1 billion in 2008, corresponding to a stunning 3% of GDP. [22] The need for subsidies has increased due to higher oil prices while electricity tariffs have been kept constant. Subsidies are channeled through two major mechanisms: The Blackout Reduction Program and the Tariff Stabilization Fund.
The Blackout Reduction Program (PRA) is targeted to poor areas. Due to low collections rates, these consumers have been receiving virtually free electricity since the program's inception.
Residential consumers outside the PRA areas and thus likely not to be among the poorest, are charged below-cost electricity prices for consumption below 700 kWh/month, a very high threshold by international standards. About 80% of residential users outside the PRA areas fall into this category. This subsidy is drawn from the Tariff Stabilization Fund (FET), which was designed to reduce the impact of high oil prices. The financial burden in this case is transferred to the distribution companies, which have found themselves unable to cover their costs in a scenario of rising oil prices, low efficiency and a limited customer base that could be charged to finance the cross-subsidy. This situation has forced the government to provide much higher than expected subsidies to the sector, which in turn translates into reduced ability to finance investments in other key sectors such as health and education. The government has started to reduce cross-subsidies gradually, with the final objective of limiting them to households with monthly consumption below 200 kWh, which is closer to thresholds for subsidized residential electricity encountered in other countries. [1]
Investment and financing
The power sector attracted an important amount of foreign direct investment (FDI) following the privatization of the main generation facilities and the distribution companies in 1999 and the subsequent expansion in generation capacity. In the period 1996-2000, the sector accounted for over 28% of FDI, reaching 37% in 2001. [1]
Generation
As previously described, the precarious situation of the electricity sector in the Dominican Republic is not caused primarily by limited generation capacity. Although a reduction of losses may provide a more economic way of resolving the crisis, there are plans for significant new investments in new generation capacity, especially in hydropower.
The private generation companies raise capital in the market. For example, in April 2007 EGE Haina raised US$ 175m in capital through 10-year bonds that were more than 10 times oversubscribed. [23]
As for hydropower, Egehid's has identified in its 2006-2012 expansion plan new projects for an estimated value of US$1,442 million. [10] The construction of first three dams (Pinalito, Palomino and Las Placetas) and associated hydropower plants will be partially financed through tied export financing from the Brazilian Development Bank BNDES approved in November 2006. The loans for the Palomino and Las Placetas projects total US$ 152.5 million, while the total costs of the facilities is estimated at US$ 512.5 million. A loan for the Pinalito project had already been approved earlier. Additional financing is provided by commercial Banks such as ABN and BNP Paribas. [24]
Transmission
There are bottlenecks in the transmission system that need to be addressed. The owner of the system, the CDE, lacks financial resources to improve the grid and the existing legislation has not allowed other mechanisms to mobilize private sector resources for transmission. [2]
The Electricity Transmission Company (ETED) has produced an expansion plan for the transmission network to be executed in the period 2006-2012. [14] Financing of US$284 million has been secured for the 2006-2008 period, with an additional US$80.75 million in process. Furthermore, US$222.5 million will be needed to finance the projects contemplated in the expansion plan for the period 2008-2012. [25]
Rural electrification
The Dominican Government claims to have plans to invest, through the Rural and Suburban Electrification Unit (UERS), about RD$1,500 million (US$890 million) in large number of scattered projects. [14]
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