The Dominican electricity sector is divided into three sub-sectors: generation, transmission and distribution. At present, power distribution and transmission is controlled by CDEEE, a state owned company, which also coordinates all three sub-sectors through three distribution entities servicing the northern (Edenorte), southern (Edesur) and eastern regions (Edeeste) of the country, respectively. Generation, however, is provided by both government and private entities. Private concessions encompassing both generation and distribution have been granted by the National Energy Council for several tourist areas, such as Punta Cana and Casa de Campo.
Most electricity in the Dominican Republic is generated by thermoelectric plants that use gas, coal, heavy fuel oil or diesel oil. About 15% is generated by hydroelectric plants and wind farms. Independent power producers, many of them recipients of foreign capital, provide about half the electricity generated in the country, which is then sold to CDEEE at prices fixed by contract. In the last five years, foreign direct investment in the sector topped 1.24 billion dollars. In 2012, the Caribbean Association of Investment Promotion Agencies (CAIPA) recognized the Dominican Republic as the number one attraction for investment projects in the field of green energy in the Caribbean region.
Because energy demand still exceeds supply, significant potential for investment exists both in traditional and alternative energy sources, as evidenced by the US$2 billion Punta Catalina project currently under construction, consisting of two identical coal-fired units, both incorporating technology designed to reduce CO2 emissions and comply with the latest international environmental standards.
Incentives for Investors in Renewable Energy Sources
The Dominican Republic encourages investment in the renewable energy sector. Under Law 57-07 on the Development of Renewable Sources of Energy, investors in this area are granted, among other benefits, the following incentives: (a) no custom duties on the importation of the equipment required for the production, transmission and interconnection of renewable energy; (b) no tax on income derived from the generation and sale of electricity, hot water, steam power, biofuels or synthetic fuels generated from renewable energy sources; and (c) exemption from the goods and services tax in the acquisition or importation of certain types of equipment.