Download the document: The Booming Dominican Electric Business
The Dominican Republic has maintained the highest economic growth in the region, with an average annual growth of 5.1% between January and September 2024, according to the Central Bank of the Dominican Republic [https://www.bancentral.gov.do/a/d/6059-economia-dominicana-acumula-crecimiento-promedio-de-51–en-eneroseptiembre-de-2024#:~:text=Econom%C3%ADa%20dominicana%20acumula%20crecimiento%20promedio,en%20enero%2Dseptiembre%20de%202024].
En este periodo, el sector de energía y agua reportó una tasa de crecimiento del 4.6%. El Fondo Monetario Internacional (FMI) informa que el PIB del país alcanzó los 126 mil millones de dólares, con un PIB per cápita de 11 mil dólares en 2024 [https://www.bancentral.gov.do/a/d/6059-economia-dominicana-acumula-crecimiento-promedio-de-51–en-eneroseptiembre-de-2024#:~:text=Econom%C3%ADa%20dominicana%20acumula%20crecimiento%20promedio,en%20enero%2Dseptiembre%20de%202024].
During this period, the energy and water sector reported a growth rate of 4.6%. The International Monetary Fund (IMF) reports that the country’s GDP reached 126 billion dollars, with a per capita GDP of 11 thousand dollars in 2024 [https://mem.gob.do/wp-content/uploads/2024/10/Informe-de-Desempeno-de-las-Empresas-Electricas-Estatales-EEE_-agosto-2024-.pdf].
The Performance Report of State-Owned Electric Companies from the Ministry of Energy and Mines shows that between January and August 2024, 15,203.2 GWh were injected into the National Interconnected Electric System (SENI), an increase of 7.4% compared to the previous year [https://mem.gob.do/wp-content/uploads/2024/10/Informe-de-Desempeno-de-las-Empresas-Electricas-Estatales-EEE_-agosto-2024-.pdf].
Additionally, the Energy Distribution and Commercialization Bulletin from the Ministry of Energy and Mines reports that energy purchases in August 2022 were 1,593.9 GWh, while in August 2023 they reached 1,767.0 GWh, representing a growth of 10.9%. For the period August 2023-August 2024, energy purchases grew by 10.3%, reaching 1,949.2 GWh in August 2024
The Inter-American Development Bank (IDB) predicts an annual increase of 2.3% in electricity demand in Latin America and the Caribbean until 2050. In this context, a 10% growth in electricity demand in the Dominican Republic is a positive sign for investments.
The Dominican electric sector has shown significant growth in foreign direct investment (FDI), with an increase of 162% in 2022 and 43% in 2023. This growth has been higher than in other economic sectors such as tourism.
Source: Prointeligencia-Prodominicana (https://prointeligencia.prodominicana.gob.do/dashboard/datamarket/5295a197-d700-4d4e-a660-5760ee8c96d9). Title. Amount DFI Energy in US$ millions.
The statistics indicate a favorable environment for both conventional and renewable energy. The growth in FDI is due to investments in renewable energies and the tendering of 2,000 MW of energy purchase contracts between 2020 and 2023. Investments have reflected a change in the generation fuel mix, mitigating the risk associated with international fuel markets. Despite the growth in renewable energy, 93.2% of demand continues to be met by fossil fuel power plants, with 27.4% of energy coming from the state-owned Punta Catalina power plant.
Source: Coordinating Organization of the Interconnected Electric System, November 19, 2024 [https://www.oc.do/Servicios/Reporte/Demanda].
In recent years, the diversity of generation sources has increased, highlighting solar energy and coal, coinciding with the operation of the Punta Catalina thermoelectric plant and the increase in concessions for renewable energy projects.
Source: Coordinating Organization of the Interconnected Electric System. November 19, 2024. [https://www.oc.do/Servicios/Reporte/CapacidadInstalada]
Source: Application of the Coordinating Organization of the Interconnected Electric System, November 18, 2024, 5:00 PM.
The horizon for the increase in the country’s electric generation, reported by the Coordinating Organization, is observed in the information on projects in the interconnection process per year. For 2025, it reports 292.6 MW of photovoltaic energy, 50 MW of wind energy, and 72 MW of thermal energy. For 2026, 812 MW of thermal energy and 50 MW of wind energy are expected. It is important to remember that capacity has a differentiated effect on the energy generated by type of technology.
Source: Coordinating Organization of the Interconnected Electric System. https://www.oc.do/Servicios/Reporte/ProyectosInterconexion
The Performance Report of the Ministry of Energy and Mines in August 2024 indicates income from Distribution Companies amounting to 1,340 million dollars, of which 1,311 million correspond to energy sales. Accumulated expenses were 2,327 million dollars, with 2,014 million allocated to energy purchases, resulting in a negative balance of 703 million dollars. The financial deficit of the sector, originating from distribution companies EDENORTE, EDESUR, and EDEESTE, is absorbed by the government, which provided a subsidy of 976 million dollars.
The IMF, in its Article IV Consultation of 2024, recommends continuing the implementation of the Electric Pact signed in 2021 to make the electric service more efficient and sustainable. The government plans to tender renewable energy and operation and maintenance contracts for the Punta Catalina thermoelectric plant, as well as manage electricity distributors under the Public-Private Partnership model [https://www.imf.org/es/News/Articles/2024/09/10/pr24323-dominican-republic-imf-exec-board-concludes-2024-aiv-consult].
Business opportunities will continue to flourish, as the Dominican government has expressed its intention for Electricity Distribution Companies EDENORTE, EDESUR, and EDEESTE to conduct renewable energy purchase tenders to meet growing demand, structured under the rules established by the Superintendence of Electricity. The government also intends to tender an O&M contract for the Punta Catalina Thermoelectric Plant.
Similarly, it plans to tender, under the Public-Private Partnership model, the administration contracts of EDENORTE, EDESUR, and EDEESTE, with the first step being to improve the financial deficit of these companies.
The electric business in the Dominican Republic evolves with economic growth. Despite financial and technical challenges, as long as government financial support continues, the sector will remain stable, and the investment climate will be attractive.
Author:
Mirna Amiama – Socia
