Focus: Monte Plata

Sunny Side Up

Mar. 8, 2017

The Dominican Republic has been known for its perpetual sunshine since time immemorial. Locals and international tourists alike venture to its wide-open countryside and the island's sprawling beaches to catch some rays. Now, the country is taking advantage of its fortuitously sunny climate by capitalizing on solar energy to power its grid.

The Monta Plata Solar Plant is the first photovoltaic power plant in the country and currently the largest in the entire Caribbean. Built by Taiwan-based General Energy Solutions and German-based Soventix, it cost around USD110 million. With a 67MW capacity, the project has 270,000 solar panels, around six times what existed in the country previously. It will deliver approximately 50,000MWh of clean energy to the country's grid and save around 70,000 tons of CO2 every year.

This is a major step toward reaching the ambitious goal President Medina has set of being 25% renewable by 2025. And it comes as there is a shift in the global effort to combat climate change by reducing dependence of fossil fuels. On an island in the Caribbean, the Dominican Republic will be one of the first countries in the world to feel the effects of rising sea levels. Thus this vital project also comes as a way to reduce the island's heavy dependence on imported oil and natural gas. Petroleum is by far the biggest import of the Dominican Republic, a dependence that brings with it much instability. The country and specifically its trade deficit are completely at the mercy of the highly volatile price of oil. Fortunately, the Dominican Republic has recently caught a break with oil prices, far as they are from their days of USD140/barrel. This has eased the pressure on the government to grant energy subsidies and turn its attention to other issues like public health and education. Thus, a growing renewables portfolio signals a greater effort for this kind of development for the Dominican Republic.

Another energy headache for the country is the chronic problem of the electricity grid. Every year the Dominican Republic loses about 25% of the energy that's pumped through the grid due to inefficient and inadequate infrastructure, as well a large amount of Dominicans helping themselves to electricity without paying for it. Thus the Pacto Eléctrico being negotiated between major players like the government, the power plants, and the electricity providers looks set to find some consensus on how to resolve the issue.

Of course, this is always a tricky affair with so many different players and interests involved. Yet the one thing renewable energy companies are adamant about is keeping in place government incentives, like the 40% tax credit that commercial businesses and homeowners are eligible for when adopting solar panels. The second and most crucial part is the net-metering system that goes along with it. This allows solar owners to inject their extra energy into the grid and receive credits in return, essentially turning them into mini public generators.

A net-metering system necessarily requires the coordination of all the previously mentioned players, which makes solar energy companies like Kaya Energy Group and Escala Solar worry that this vital system will get lost in the political shuffle. At the end of the day, as large and helpful as these grand solar projects like Monte Plata are, the growth of the self-consumption market is the real key to solving the country's energy woes. The inherently diversified risk of thousands of homes around the country with their own power supply spells the greatest potential.

Each morning the sun shines on the Dominican Republic is a reminder of the potential for solar energy. The combination of the government's bold determination, large-scale projects like Monte Plata, and the increasing competiveness of solar companies resulting in a downward push in the price of panels ensures that the country is well on its way to soaking up all the economic benefits that come with solar.

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