The Dominican Republic, the Caribbean country that shares an island with Haiti, plans to roll out $770 million of wind farms through 2015 by enticing developers with some of the region's most generous rates for renewable energy.
Gamesa Corp. Tecnologica SA, Europe's second-largest wind- turbine maker, and Spain's Grupo Inveravante are among companies developing 350 megawatts of capacity over the next four years, said Hipolito Nunez, a national energy commission adviser.
The Dominican Republic gets about 12 percent of its power from renewable sources, with the rest generated from costlier fossil-fuel imports. It plans to boost that share to 25 percent by 2020 by offering wind developers more than double the amount of money for their electricity than is available in some other Latin American countries, according to Nunez.
"Wind energy is much cheaper than petroleum," he said Aug. 2 in a telephone interview. "We will install the maximum that the grid can support."
Under a government incentive mechanism for renewable energy, state-owned power utility Corp. Dominicana de Empresas Electricas Estatales, known as CDEEE, is offering about $137.40 for every megawatt-hour produced from wind farms, according to Ana-Maria Vidaurre, a team leader at the Inter-American Development Bank that's financing two projects in the country.
Country Risk
The price, which will be linked to U.S. inflation until 2018, has to be high enough to cover the cost of shipping equipment there and to offset perceived country risk, she said.
"Historically, there have been delays in offtakers' ability to pay, but in the end they always pay," she said.
Argentina offered wind developers an average of $127 a megawatt-hour in a government auction, national energy company Energia Argentina SA said in September last year. Brazil offered 131 reais ($83.27) and Peru agreed to pay $65.50 in their latest auctions, according to statements from their energy regulators.
Gamesa and Inveravante weren't immediately available to comment when contacted by Bloomberg News.
While the price per megawatt-hour, known as the feed-in tariff, is higher than in other Latin American countries, it's lower than the average $142 a megawatt-hour paid by local power distributors for spot-market electricity from January to October last year, according to Vidaurre.
"Most generation in the Dominican Republic is based on fossil fuels that have to be imported and are subject to price volatility," she said.
First Wind Park
The Dominican Republic's first 33-megawatt wind farm, belonging to Santo Domingo-based power utility Empresa Generadora de Electricidad Haina SA, will come online in September, Development Director Jose Rodriguez said by e-mail.
Gamesa, based in Zamudio, Spain, is developing a 50- megawatt wind park in the southern Dominican province of Monte Cristi, while Inveravante plans a 30.8-megawatt facility in Peravia, according to a July 13 statement from the Inter- American Development Bank, which is providing $78.3 million in loans for the ventures.
They will be the country's first renewable-energy projects to benefit from the feed-in tariff program, the bank said.
Bringing 350 megawatts of wind farms online in four years may be difficult for a poor country such as the Dominican Republic, Fraser Johnston, an analyst at Bloomberg New Energy Finance in London, said yesterday by phone. It took six years for Poland to start up 270 megawatts of wind parks and seven years for Bulgaria to build 343 megawatts, he said.
The Dominican Republic "would be beating lower-tier EU countries," he said. "That's quite ambitious."
The nation's gross national product per capita was about $6,300 in 2004, ranking the country 114th in the world, according to the U.S. Central Intelligence Agency. A quarter of the population live below the poverty line, according to a CIA webpage last updated in 2005.
