LONDON — The Dominican Republic will soon have its first large-scale solar park, the project developer has announced.
German renewable energy developer Wirsol has begun construction on a 64-MW solar photovoltaic (PV) park in the Dominican province of Monte Plata, the company said. Wirsol plans to connect an initial 32 MW to the grid by the end of 2013.
“President Danilo Medina Sánchez has personally awarded the country’s first power purchase agreement to us,” said Markus Wirth, a member of Wirsol’s board of directors. The PPA was granted by the Corporación Dominicana de Empresas Electricas Estatales (CDEEE), meaning that electricity from the project will be sold directly to the state.
In the Dominican Republic, a recent population increase and rapid economic growth have combined to create rising electricity demand. The island nation still relies primarily on fossil fuels, largely diesel and gas, and although its solar irradiation is 50 percent higher than Germany’s, there has been very little solar power developed in the region. In 2011 the Worldwatch Institute reported that the largest solar installation on the island was a 100 kW roof-mounted system atop a water purification and bottling plant in Santo Domingo. But analysis firm NPD Solarbuzz predicts that PV demand across Latin America and the Caribbean could see explosive growth through 2017, with a forecasted 45 percent compound annual growth rate.
According to Matthew Fellmeth, an analyst at renewable energy consulting firm Reznick Think Energy, Caribbean governments are beginning to support the development of renewable energy projects, as are utilities and independent power producers. The Dominican Republic aims to get 25 percent of its energy from renewable sources by 2025, and to reduce its carbon emissions by 25 percent from 2012 levels by 2030. The nation’s Renewable Energy Law offers financial incentives such as tax exemptions, a feed-in-tariff (FiT) and a national fund for renewable energy.
But, says Fellmeth, even with support for the development of renewable power sources, there are still substantial obstacles to overcome.
The island’s grid system has one of the highest rates of distribution losses in the world, according to the Worldwatch Institute‘s sustainable energy roadmap, while excessive bureaucracy has slowed development – project developers currently need to go through a 14-step process to get a renewable energy license, the roadmap said.
According to Worldwatch, Dominican developers generally lack the capital necessary to undertake project development, and the terms offered by banks for renewable energies are no more favourable than those offered for conventional power projects. Only Banco Hipotecario Dominicano (BHD) offers low-interest loans for small to medium-sized renewable energy projects.
Mark Konold, Worldwatch’s Climate and Energy Caribbean project manager, said in a recent blog post that “The Dominican government has already put in place some strong mechanisms to promote renewables growth, but it is currently not utilising them to their potential.”
Although the government offers net metering for PV and its renewable energy law is designed to encourage sector growth, Konold said “decision makers are reverting to choices that only entrench the country’s fossil fuel dependence,” including cancelling or reducing the nation’s incentives for renewables and replacing outdated fuel-oil generating capacity with new coal-fired power generation.
“Instead of gutting renewable energy support, the Dominican government should be strengthening the mechanisms that promote a cleaner, more sustainable, and more independent energy sector,” said Konold. “It should also direct more support to expanding the financial sector’s ability to underwrite large-scale projects. Right now, funding for renewable projects is limited to a pool of money that supports smaller projects with payback windows of only five to seven years.”
Andreas Margara, a Wirsol spokesperson, said the Monte Plata project faces additional challenges. “Transport and logistics to and on the island are very difficult,” he said, and installation will happen during hurricane season.
Wirsol’s subsidiary Wirsol Caribbean plans to develop further projects on the islands, including possible “smaller rooftop plants, solar for the local industry and mainly further solar parks,” Margara said.
Lead image: Construction begins on the Monte Plata solar park, courtesy Wirsol AG