23/2/2015

RenewableEnergyinDominicanRepublic
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RenewableEnergyisoneofthefastestgrowingindustriesintheworldduetotheurgent
problems anticipated by climate change. Driven by worldwide technological innovation
and manufacturing of green products and systems, the sector is an excellent
investmentopportunityintheDominicanRepublicwherethereisanabundanceofnatural
resources.
LEGALFRAMEWORK
GoinggreenintheDominicanRepublicisgovernedbytheConstitution,theRenewable
EnergyIncentivesandSpecialRegimesLaw#5707(acomplementtoGeneralElectricity
Law#12501),andtheEnvironmentalandNaturalResourcesLaw#6400.

RenewableEnergy

The Constitution of the Dominican Republic, amended on January 26, 2010 for the 39th
timein167years,devotesseveralarticles(Articles14to17,66and67)tothecountrys
natural resources, which establish the general legal framework for dealing with natural
resources.SomeimportantprincipleslaiddownbytheConstitutionare:

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Exploration and exploitation of natural resources can only be done under rational and
sustainableenvironmentalconditions.
The environment must be protected for present and future generations by prohibiting
detrimentalactivities,promotingalternativeenergysources,etc.
Ecosystems and wildlife protected by the National System of Protected Areas can be
changedonlybyatwothirdsvoteineachofthetwohousesofCongress.
NonrenewablenaturalresourcesbelongtotheDominicanpeople.
GeneralElectricityLaw#12501,enactedJuly26,2001,isthelegalumbrellaunderwhich
RenewableEnergyisgoverned.Itprovidesfortheproduction,transmission,distribution,
and commercialization of the countrys electricity in a neutral and nondiscriminatory
manner.TheNationalEnergyCommission(CNE),theSuperintendentofElectricity(SIE),
and the Coordinating Agency for the Interconnected Electrical System (OC) are
responsibleforgoverningtheactivitiesintheelectricalsector.
Renewable Energy Law # 5707, dated May 7, 2007, is administered by the National
Energy Commission (CNE), the Superintendent of Electricity, and the Coordinating
AgencyfortheInterconnectedElectricalSystemasasubsectoroftheElectricitysector.
Law 5707 zeros in on sustainable energy endeavors with four main objectives: (a) to
increasethediversityofenergysources(b)reducedependenceonimportedfossilfuels,
(c)mitigatethenegativeimpactoffossilfueluseontheenvironment,and(e)stimulate
private investment in renewable energy. The primary renewable sources targeted are
biodiesel,ethanol,hydro,solar,wind,tidalandoceanic.
Significantly, law 5707 allows the use of ethanol as a motor vehicle fuel, providing a
potential of up to 10% in local fuel production and a productive use of unused, fallow
sugarcaneacreage.
RENEWABLEENERGYPROJECTTYPES
The law provides incentives to public, private, or a combination of both, corporate, and
cooperative projects that produce energy or biocombustibles and show physical,
technical, environmental, and financial viability. The law expressly encourages the
installationandexploitationof:
Wind farms and individual windmills with an initial installation that does not
generatemorethan50M
Microandsmallhydroelectricinstallationsthatdonotgeneratemorethan5MW
Electrosolar(photovoltaic)installationswithnorestrictiononproduction
Thermosolarinstallationsofupto120MWofconcentratedsolarenergyper
centralunit
Mediumtemperature thermosolar energy installations to obtain clean hot water
andconditionairfromcoolingequipment.
Energy farms or any infrastructure of any size devoted exclusively to converting

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biomassintoabyproductforenergyconsumption,includingvegetableorpressure
oils to manufacture biodiesel, and plant hydrolyzation to produce ethanol or
anothertypeofbiofuel.
Central electrical units using primarily biomass fuels either directly, or through a
transformationprocessthatgeneratesaminimumof60%oftheprimaryenergy,
and which produce an installed energy of no more than 80 MW per
thermodynamicorcentralunit.
Biofuel production plants (distilleries or biorefineries) of any size and in any
volume.
Oceanicenergyinstallationsofanysizeandanytype.
RENEWABLEENERGYINCENTIVES
Upon compliance with certain regulatory procedures specific to each project, the
followingconcessionsandincentivesaregrantedtooperationsthatproduceoruseclean
technology:
Exemption from import duties on equipment necessary to produce energy from
renewablesources.
ExemptionfromITBIS(valueaddedtax)forcertainequipmentexpresslylistedin
thelaw.
Exemptionfromincometaxforuptotenyearsuntiltheyear2020.Incomemust
be derived from sources dedicated to generating or selling renewable energy, or
sellingorinstallingrenewableenergyequipment,partsorsystemsspecifiedunder
the law. Such equipment, parts, and systems must be produced locally with a
minimumaggregatevalueof35%.
A5%taxreductiononinterestonforeignfinancingofrenewableenergyprojects.
A single tax credit of up to 75% (depending upon the energy technology) on the
costofcapitalequipmentusedinpreapprovedprojectsthatchangetoorexpand
the use of renewable energy in residential, commercial, or industrial
establishments.Thetaxcreditisapportionedoverathreeyearperiodattherate
ofonethirdperyear.
Smallscale projects destined for community use that develop renewable energy
sources up to 500 Kw can apply for financing, at the lowest market rates, in an
amountupto75%ofthetotalcostoftheoperationandinstallationoftheproject.
INTERNATIONALINITIATIVES
The United States is keen on supporting clean energy, lowcarbon, climateresilient
projectsintheCaribbeanthroughprivateinvestmentorbilateralprograms,andpledged
US$30 billion in funds between 2010 and 2012 to accelerate developing countries
progressincombatingglobalwarming.Withsomeofthehighestelectricitypricesinthe
Caribbean,theDominicanRepublicofferslucrativeopportunitiestoinvestorsinthisarea.
SomeoftheU.S.supportedinitiativesare:
Energy and Climate Partnership of the Americas (ECPA). Leaders of the Western
Hemisphere voluntarily partner with countries in the hemisphere to accelerate clean
energydevelopmentbysharingbestpractices,encouraginginvestment,andcooperating
intheresearchandimplementationofnewtechnologies.Initiativesmaybemulticountry
orbilateralandcaninvolvetheprivatesector,academia,civilsociety,andinternational
organizations.
The U.S. National Export Initiative, intent on doubling the number of U.S. exports by
2012,promotestheuseofcleanenergytechnologiesamongU.S.exporters.
The U.S.Brazil Biofuels Partnership Initiative attempts to leverage Brazils global
expertise in the development and use of biofuels. In 2007, the United States and Brazil
entered into a memorandum of understanding and have collaborated with the Inter
AmericanDevelopmentBank,theOrganizationofAmericanStates(OAS),andtheUnited
Nationstopromotescientificcooperation,development,anduseofbiofuelsindeveloping
countriestomitigatetheeffectsofgreenhousegasemissions.Theprimarygoalsofthis
initiativearetodevelopsustainablebiofuelsforaviation,anddevelopcommonstandards
for, encourage research in, and create a multilateral forum in aviation biofuels. The
initiative targets the Dominican Republic, Haiti, El Salvador, St. Kitts, and Nevis as the
initial beneficiaries, and the Dominican Republic has already been the beneficiary of a
US$300,000 private contract to obtain technical assistance in blending ethanol with
domesticallysoldgasoline.
The Global Bioenergy Partnership, comprising the U.S., Brazil, and thirty other
governmentsandinternationalorganizations,promotesthesustainableuseofbioenergy
in developing markets by converting biomass to energy. It brings together public,
private,andcivilsocietytocreateaforumforsuggestingtools,facilitatinginvestments,
implementingprojects,andfosteringresearchanddevelopmentinbioenergy.Thethree
strategic areas of interest are sustainable development, climate change, and food and
energysecurity.
In 2010, the Organization of American States (OAS), the worlds oldest regional
organization uniting thirtyfive member states in political and social discussions to
improve economic development, received a U.S. grant to assist Caribbean energy
ministries, in partnership with CARICOM, to conduct renewable energy dialogues within
theregion,andtoprovidetechnicalassistancetoqualifiedprojects.
INTERNATIONALFUNDING
Funding assistance needed to harness reliable and affordable energy in developing
countries is delivered through traditional U.S. channels such as Embassy programs and
AID missions, the Peace Corps, and the Millennium Challenge Corporation (MCC), and
international channels such as the United Nations Framework on Climate Change
(UNFCCC),andmultilateralfinancingorganizationssuchastheClimateInvestmentFund

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andtheGlobalEnvironmentFacility.
The Millennium Challenge Corporation (MCC) is an independent U.S. foreign aid agency
created in 2004 to grant aid to wellperforming developing countries to achieve
sustainableeconomicgrowthandreducepoverty.
The United Nations Framework on Climate Change (UNFCCC), conceived in 1992 as an
international environmental treaty, is dedicated to stabilizing greenhouse gas emissions
globally to prevent further interference with the climate by setting mandatory emission
limitsthroughprotocols.TheprincipalprotocolistheKyotoProtocolunderwhichmember
countriescommittoreduceaclusterofgreenhousegaseswithintheirterritories.
The Climate Investment Fund is a funding agency of the World Bank formed in 2008 to
combatglobalclimatechange.Itcomprisestwofunds.One,theCleanTechnologyFund,
is aimed at public and private investments promoting lowcarbon economies, and
provides an innovative model for development and climate control financing by working
with embedded national plans and strategies. Fund recipients must be ODA eligible and
have an active Multilateral Development Bank program. The sister fund, the Strategic
Climate Fund, is designed to help developing countries create climateresistant
economies,reducedeforestation,andincreaseneweconomicopportunitieswithrenewal
energy.
The Global Environment Facility (GEF), established in 1991 as an independent financial
organization, partners 182 member nations with international organizations and the
privatesectortoassistdevelopingcountriesinidentifying,developing,andimplementing
eligible projects in biodiversity, climate change, international waters, land degradation,
persistentorganicpollutants,andagricultural,forestandgrazingadaptation.Itservesas
the financial mechanism for several international conventions, including UNFCCC, and is
heraldedasthelargestfunderofglobalenvironmentalprojects.Sincetheorganizations
inception,theDominicanRepublichasbeenthebeneficiaryofeightgrantswiththelatest
receivedin2009.
GUZMANARIZAONRENEWABLEENERGY
Guzman Arizas service in the renewable energy sector is informed and responsive. We
areattunedtocontinuallyevolvinglegislationandinternationalinitiativesthataddressthe
intertwinedchallengesofmitigatingclimatechangeandobtainingenergysecurityforthe
Dominican Republic. We rapidly deploy the information you need to invest wisely, and
applyourlegalexpertisetohelpyoudevelop,produce,transport,andmarketyourgreen
project. Our practice areas span energy, tax, environment, finance, real estate, public
procurement, contracts, business and companies, intellectual property, and labor and
employment.Wewillhelpyouprocureyoursite,obtainregulatoryapprovalsandpermits,
secureintellectualpropertyrights,negotiateconstructioncontractsandcleantechnology
licensing agreements, and meet labor and employment requirements. The time to go
green in the Dominican Republic is now, and Guzman Ariza has the background and
dedicationtoclientsneededforavitalrenewableenergyinvestment.

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