Introduction
Chadia is an attorney and energy specialist with over nine years of experience in best practices of clean energy transitions, market development, and investment in infrastructure projects in the Dominican Republic, Argentina, and the USA. She is currently an Advisor for Clean Energy and Climate Solutions for the Ministry of Energy and Mines of the Dominican Republic where she leads several initiatives aligned with the country’s agenda for sustainable development and the insertion of emerging technologies and policies that will allow the country to accelerate its just energy transition.
We had the opportunity to hear from her about the recently approved Investment Plan for the Dominican Republic under the Climate Investment Fund’s Accelerating Coal Transition (ACT) Program. The plan aims to support the country’s transition from coal-fired power generation to renewable energy sources in a just and inclusive manner.
Background and Objectives
Question: Can you provide an overview of the Dominican Republic's ACT Investment Plan and its primary objectives in terms of transitioning away from coal and promoting renewable energy?
The country’s journey began in 2021 with participation in the CIF-ACT Program, where we submitted an Expression of Interest (EoI) to advance our energy transition. In 2023, the CTF Trust Fund Committee recognized the Dominican Republic as an eligible country to develop an Investment Plan, reaffirming our leadership in sustainable development.
The Investment Plan marks a historic step in our commitment to sustainable energy and long-term decarbonization. With $85 million in financing, the plan aims to replace 312 MW of coal energy with renewables and storage. It fosters regulatory and institutional framework improvements, market mechanisms, and stakeholder participation to support a just and inclusive transition for affected workers and communities. Through these initiatives, the Dominican Republic is dedicated to ensuring a sustainable and secure energy future for all its citizens.
However, the Dominican Republic faces unique challenges in its electrical system, characterized by an isolated island network and limited water resources, which impact the stability and security of the energy supply. As the economy experiences rapid growth, electricity demand has surged at a rate exceeding GDP growth. The aforementioned requires robust infrastructure and diversification of energy sources to ensure a stable and affordable supply for all sectors and citizens.
Thus, the Investment Plan implementation will be gradual, orderly, and voluntary. It will focus on encouraging private sector involvement to ensure an equitable transition that maintains economic viability and energy security.
Challenges and Opportunities
Q: What are some of the key challenges the Dominican Republic faces in implementing the ACT Investment Plan, and how do you see these challenges being addressed?
The implementation of Investment Plan faces several key challenges, each requiring strategic approaches to ensure a successful transition and energy security. Many of these challenges have been successfully addressed in other jurisdictions, presenting a valuable opportunity for the Dominican Republic.
It is important to note that the plan aims to retire coal plants by 2030-2035, with enabling activities beginning in 2025. Pillars 1 and 2 focus on maintaining energy reliability while creating favorable market conditions for this transition. The plan has been designed with flexibility and resilience to adapt to changes in market dynamics, institutional, technological, environmental, social, and financial risks, as well as other emerging realities.
The challenges can be grouped into three main categories:
- Technical: Ensuring energy security while integrating variable renewable sources is a top priority. We have conducted in-depth analyses to model the impact of various options, ensuring the system can absorb changes without compromising reliability. The replacement of coal-fired generation facilities presents challenges since renewables cannot always be integrated on-site. Addressing transmission constraints will be vital to effectively utilize renewable energy. Significant efforts are being made to enhance data collection, allowing for more accurate assessments of the impacts related to the early retirement of generation facilities.
- Financial: The Investment Plan aims to pilot Coal Transition Credits as a new asset class, blending finance with carbon markets to create a sustainable funding framework. However, establishing a reliable carbon market mechanism presents numerous challenges itself. While this could provide an opportunity to develop the market in the Dominican Republic, the plan remains flexible, recognizing that such development may not occur. As a result, fallback mechanisms involving concessional funding are in place.
- Social: The plan adopts a programmatic approach, linking projects to achieve broader goals and ensuring cohesive and strategically aligned efforts for a more efficient transition. It promotes voluntary participation and ongoing stakeholder dialogue to maintain long-term consistency with decarbonization goals. Flexible financial instruments will ensure resilience during the implementation period from 2025 to 2035.
By addressing these challenges through collaboration, robust financial mechanisms, and a focus on data-driven decision-making, the Dominican Republic can successfully navigate the complexities of the ACT Investment Plan and achieve its energy transition objectives.
Implementation Strategies
Q: How does the plan intend to balance the retirement of coal-fired power plants with the integration of renewable energy sources, ensuring energy security and reliability?
The plan proposes several strategies to address the technical challenges associated with balancing the retirement of coal-fired power plants with the integration of renewable energy sources, all while ensuring energy security and reliability. To achieve this, the plan emphasizes a phased approach, allowing time for the gradual integration of renewable energy and storage into the energy mix that helps maintain a stable supply while reducing reliance on coal.
Additionally, the plan includes comprehensive assessments of the existing energy infrastructure to identify necessary upgrades and enhance the grid’s capacity to handle variable renewable energy. It also promotes investments in energy storage and demand response technologies, which are crucial for managing fluctuations in energy supply and demand.
Moreover, decision-making will be the result of consensus through the Public-Private Working Group focused on ensuring diverse stakeholder collaboration while encouraging private sector involvement and active participation.
Q: How do you see the role of carbon markets in the plan?
Carbon markets offer significant opportunities for financing Component III through various financial instruments, including a price guarantee mechanism for Coal Transition Credits, contingent upon market conditions at the time operations become executable. The proposed support mechanisms for Coal Transition Credits aim to provide financial incentives for plant owners to monetize the CO2eq avoided resulting from the early retirement of coal plants and their replacement with high-quality renewable energy sources. These high-integrity Coal Transition Credits will ensure transparency and accountability in the market by following robust eligibility criteria and methodologies. The ACT program could serve as a firm price guarantee, facilitating decision-making and optimizing the negotiating position of stakeholders in potential carbon credit transactions.
The Investment Plan assesses the Dominican Republic’s readiness to engage in carbon transaction mechanisms within the energy sector, concluding that the country faces challenges in integrating into both regulated (Article 6 of the Paris Agreement) and voluntary carbon markets due to gaps in policy frameworks and technical implementation readiness. Therefore, the plan focuses on preparing the country for participation in carbon market mechanisms through mitigation initiatives within the energy sector and the necessary processes to operationalize them.
I believe the Investment Plan presents an opportunity to develop a sectoral strategy for the energy sector’s involvement in carbon markets, which is essential for piloting Coal Transition Credits as an asset class in the country. As outlined in the Investment Plan, a thorough analysis will be conducted for each asset. This process begins with an additionality test to evaluate whether it is feasible to proceed. However, it also recognizes that the internal institutional structure for the execution of the process above requires substantial capacity building, and policy and institutional framework at a national level to meet the enabling conditions corresponding to the legal frameworks.
Stakeholder Engagement
Q: How does the Ministry of Energy and Mines engage with various stakeholders, including communities impacted by the transition and private sector entities, to ensure a just and inclusive transition?
The Investment Plan proposes a Public-Private Working Group to ensure diverse stakeholder collaboration for a holistic transition. It follows Chile’s Decarbonization Roundtable model and includes a Gender and Inclusion Roundtable to promote equality.
It also includes structured retraining and job transition programs under Pillar 2: People and Communities to ensure a just transition for workers affected by the coal plant closures.
Key elements include:
- Job Retention & Redeployment: Most employees and contractors are expected to be repositioned within their corporate groups or affiliated companies
- Upskilling & Reskilling Programs: Workers will have access to training in Industry 4.0 technologies, entrepreneurship, financial literacy, and soft skills to help them transition into new jobs
- Targeted Support for Indirect Workers: The plan acknowledges that up to 1,300 workers (180 direct, 320 outsourced, and 800 indirect workers) could be affected and includes initiatives to support their transition
- Social Inclusion & Gender Considerations: Training programs will include mechanisms to increase female participation and protect vulnerable groups
Role of women in the energy transition
Q: How does the Dominican Republic's energy transition plan, particularly the ACT Investment Plan, address gender equity and the role of women in decision-making processes, and what specific initiatives or policies are in place to ensure their participation and empowerment in the transition to a more sustainable energy sector?
Findings
- Gender Disparity in Employment: Women are significantly underrepresented in both plants (10% in ITABO, 14% in Barahona Carbón), highlighting persistent gender gaps in the energy sector.
- Infrastructure Limitations: Facilities still reflect gender biases, with bathrooms in control rooms primarily designed for men, limiting inclusivity for women workers.
- Education and Job Access: Although there are technical universities nearby, women’s participation in STEM careers remains low, reinforcing employment barriers.
- Community Relations and Economic Linkages: The plants have direct community interactions, with local suppliers providing goods and services.
- Empowering Women Entrepreneurs: While women suppliers are already engaged, their role can be further strengthened by promoting women-led businesses within the energy supply chain, fostering economic inclusion, job creation, and local business growth.
Plan
- Inclusive Decision-Making: The Investment Plan promotes the inclusion of women in energy sector decision-making bodies. This involves creating platforms where women can voice their concerns and contribute to policy discussions, ensuring that their perspectives are considered in the transition process.
- Capacity Building and Training: Specific initiatives focus on building women’s capacities in the energy sector. Training programs are being developed to enhance their technical skills and knowledge, enabling them to take on leadership roles within the industry and participate effectively in the transition to renewable energy.
- Access to Resources: The plan aims to improve women’s access to financial resources and support mechanisms. By facilitating access to funding for women-led projects in renewable energy, the initiative encourages entrepreneurship and innovation, helping women to establish and grow their own businesses in this sector.
- Stakeholder Engagement: Ongoing stakeholder dialogues focus on gender issues, fostering collaboration among government, civil society, and women’s organizations. This engagement helps ensure that the unique needs and challenges faced by women are addressed throughout the energy transition.
- Monitoring and Evaluation: The Investment Plan includes mechanisms for monitoring and evaluating gender equity outcomes. By assessing the impact of initiatives on women’s participation and empowerment, the plan can adapt and improve its strategies over time, ensuring that gender equity remains a priority.
Future Outlook and Impact
Q: What are your expectations for the long-term impact of the ACT Investment Plan on the Dominican Republic's energy sector, and how do you see this plan contributing to a broader energy transition in the country, including potential economic, environmental, and social benefits?
The ACT Investment Plan is an ambitious initiative that presents numerous opportunities to enhance our energy sector and transform our systems. By focusing on a programmatic and holistic approach, the plan aims to integrate various components that can significantly contribute to a broader energy transition in the Dominican Republic.
In the long term, I expect the Investment Plan to deliver substantial economic benefits, including job creation in the renewable energy sector and increased energy independence. Environmentally, it will contribute to reduced greenhouse gas emissions and promote sustainability, aligning with global climate goals.
However, it is crucial to recognize that this plan involves many moving pieces that must be carefully considered. Effective coordination among stakeholders, strategic investments, and ongoing monitoring will be necessary to ensure that the plan achieves its intended outcomes. By addressing these complexities, the Investment Plan can successfully drive the Dominican Republic toward a more sustainable, secure, and resilient energy future.
