Dominican Republic's reliance on foreign energy
The Dominican Republic is significantly reliant on foreign energy sources, primarily importing fossil fuels to meet its energy needs. Historically, the country depended on biomass for cooking and heating until modern energy sources began to emerge in the 1920s. The establishment of the Corporación Dominicana de Electricidad (CDE) in 1955 marked a shift towards expanding the electricity network, although the country faced challenges due to its complete reliance on imported oil, which left it vulnerable to global oil price shocks in the 1970s. Efforts to alleviate these financial burdens included the San José Agreement, which provided discounted oil supplies to Caribbean nations.
Despite these measures, energy supply issues persisted, exacerbated by heavy subsidies and poor coordination in energy policy. In the mid-1990s, the government began reforms to enhance the energy sector, introducing private investments and partially privatizing the CDE. The Dominican Republic is now transitioning towards renewable energy sources, with around 17 percent of its energy coming from renewables by 2022 and plans to reach 30 percent by 2030. As of 2023, the country has operational wind farms, solar plants, and biomass facilities, reflecting a commitment to diversifying its energy portfolio and reducing dependence on imports.
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Dominican Republic's reliance on foreign energy
Official Name: Dominican Republic.
Summary: The Dominican Republic covers most of its fossil fuel energy needs with imports. The country is looking for alternatives in order to rely more on domestic energy sources.
The Dominican Republic, like most Caribbean states, is rather poor in domestic fossil fuel resources but rich in biomass, wind energy, and solar energy. Until the mid-twentieth century, the country relied mainly on biomass such as firewood and sugarcane bagasse, used for cooking or heating.
During the 1920s, modern energy sources such as oil and electricity began slowly to be introduced. In 1955, the Dominican government created the Corporación Dominicana de Electricidad (CDE), which was entrusted with extending the electricity network to the whole country. Until the mid-1990s, the CDE monopolized all activities in the power sector.
During the 1970s, as the Dominican Republic was completely reliant on imported oil, the oil price shocks of 1973 and 1979 strongly affected the balance of payments. In order to alleviate the financial burden from oil price increases in the Caribbean area, in 1980 the governments of Mexico and Venezuela signed the San José Agreement with the governments of some Caribbean and Central American nations, among them the Dominican Republic, to supply 160,000 barrels daily at discount prices.
Even though the San José Agreement helped to lessen the financial burden on its national budget, the Dominican Republic continued to have energy supply problems, which, as the World Bank diagnosed in 1991, were related, on one hand, to massive subsidization of energy products (electricity and petroleum) and, on the other, to poor coordination in the implementation of energy policy by the different entities with responsibility in that area.
In 1989, subsidies of domestic energy prices represented as much as 4 percent of the Dominican gross domestic product (GDP); there was a strong distortion in the relative prices, which favored inefficient energy use. Since the mid-1990s, the Dominican government has initiated a series of reforms in the energy sector in order to improve its performance. Reforms have included allowing the participation of private investment in the sector and raising the price of domestic oil products. The government was assigned the role of policy elaboration and oversight; in the electricity sector, the state-owned CDE was partially privatized, and its activities were separated into generation, transmission, and distribution.
The Dominican government created three power utilities for generating electricity. Two of them run on fossil fuels, which were imported, and the third is in charge of all hydroelectric plants in the country and remains exclusively in state hands.
Because the country relied on imported fossil fuels to produce energy, it began transitioning to renewable energy in the 2020s. By 2023, the Dominican Republic had ten wind farms and nine solar plants in operation along with one biomass plant. The country was working on additional solar and wind power projects in 2024 to expand its capacity. By 2022, about 17 percent of the Dominican Republic's energy was produced from renewable energy sources, and the country had set of goal of increasing this to 30 percent by 2030.
Bibliography
Deutsche Gesellschaft für Technische Zusammenarbeit. “Energy-Policy Framework Conditions for Electricity Markets and Renewable Energies: 23 Country Analyses.” September 2007. www.gtz.de/de/dokumente/en-windenergy-colombia-study-2007.pdf. Accessed 31 July 2024.
"Dominican Republic: 'A Major Leap' in Renewables." Energy and Climate Partnership of the Americas (ECPA), 28 June 2023, ecpamericas.org/newsletters/dominican-republic-a-major-leap-in-renewables/. Accessed 31 July 2024.
National Renewable Energy Laboratory. "Energy Snapshot: Dominican Republic." Energy Transition Initiative: Islands, US Dept. of Energy, Sept. 2015, www.nrel.gov/docs/fy15osti/64125.pdf. Accessed 31 July 2024.
Tejeda, Lilian. "Renewables 'Boom' in the Dominican Republic, But Some Feel Sidelined." Diaglogue Earth, 22 Sept. 2023, dialogue.earth/en/energy/379807-renewables-boom-in-the-dominican-republic-but-some-feel-sidelined/. Accessed 31 July 2024. US Energy Information Administration. “Country Analysis Brief: Dominican Republic.” www.eia.gov/countries/country-data.cfm?fips=DR. Accessed 31 July 2024.