Process for investors to obtain approval for renewable energy projects
June 26, 2023
Authors: Gustavo Pérez and Ney de la Rosa
Authorization regime to approve energy projects in the Dom. Rep.
The energy sector is included among the so-called Sectors of General Economic Interest (SIEG), which refer to sectors that carry out commercial service activities and, in turn, fulfil missions of general interest. By belonging to this category, the Dominican energy sector is strictly regulated by the state in an attempt to balance the economic and commercial interests that converge within it, to guarantee that citizens receive an efficient, constant, sustainable and quality service.
Although the Dominican State recognizes the private initiative in a regime of free competition, in relation to the SIEG, special regulations are established that respond to the public and general interest. Particularly in the energy sector, the controls established by the Dominican State range from the participants within the sector, to the modalities and conditions that must be fulfilled.
In the Dominican legal system, the state’s regulatory exercise manifests itself in different ways, one of the most relevant being the authorization regime, which applies (among other sub-sectors) to the sub-sector for the generation of renewable energy. Investors interested in accessing the renewable energy sub-sector must comply with the legal, technical and financial requirements demanded by the local Administration; to obtain approval of your project and join said sub-sector.
Types of concessions for renewable energy projects
The National Energy Commission (CNE) is the body that issues the corresponding permits for the exploitation of electrical works in the field of renewable energy. The Commission is in charge of receiving the information of interested parties and approve or reject the applications submitted.
The procedure for obtaining permits before the CNE is divided into two phases:
1. Request a provisional concession: which authorizes the performance of prospective activities, analysis and studies necessary to verify the feasibility and sustainability of the electrical work.
2. Request the issuance of a definitive concession: which definitively authorizes the exploitation, installation and start-up of the electrical work, from primary sources of renewable origin.
Law No. 57-07 on Incentives for the Development of Renewable Energy Sources and their Special Regimes, defines the provisional concession as “the administrative resolution that grants the power to enter public or private land to carry out studies and prospecting related to electrical works”, while said Law considers the definitive concession as “the authorization of the Executive Power that grants the interested party the right to build and operate electrical works”.
The provisional concession can be considered as an exploratory phase, however, the definitive concession is the one that constitutes the formal authorization to start up an energy generation project. Both phases are part of the same project, being considered as complementary and necessary processes to materialize an energy project. The provisional concession and the definitive concession are subject to different rights and obligations.
Requirements for provisional and definitive concessions
PROVISIONAL CONCESSION
The requirements of provisional concessions are mainly focused on the verification of the applicant and, on validating the preliminary feasibility of the project. If the energy project to be executed has the necessary technical and financial characteristics necessary to do so satisfactorily, it will be approved at this stage and the provisional permit will be granted.
We emphasize that the Resolution of the National Energy Commission (CNE) that authorizes the provisional concession, establishes the term of said concession, which is usually 18 months. If the relevant surveys and studies are not carried out during the term of the concession, the concession expires, and the investor will lose the right to request the definitive concession based on the expired concession.
DEFINITIVE CONCESSION
The requirements are similar to those for obtaining the provisional concession, but it entails new requirements, among which the requirement to present the Certificates of Title stands out. These Certificates of Title correspond to the land where the energy project will be developed or, to the agreements executed between the owners of said land and the promoters of this land. In turn, the Certificates of Title must indicate that the land will be used for the specific purpose of installing an power generation plant for a period of not less than 20 years.
In the latter case, for the provisional concession it will be enough to present the lease contracts for the land or an option to purchase said land.
To request the definitive concession, the presentation of the Environmental Impact Study, reviewed and approved by the Ministry of Environment and Natural Resources (MIMARENA), is required. In this phase, after the CNE examines the request, said Commission will limit itself to recommending to the Executive Power whether to execute the final concession contract or not. The Executive Power is the one who will grant this concession and issue the corresponding enabling title.
Educating yourself about the process and local regulations promotes the successful approval of your energy project
In order to successfully submit a power generation project to the CNE, it is essential to have full and detailed knowledge of the established local procedure and current Dominican regulations. This will facilitate the approval of the concessions, which will allow the investor to operate in the power generation sub-sector with a primary source of renewable energy.
It will also allow the investor to benefit from incentives, including the tax incentive which has encouraged a substantial increase in investment in this sub-sector. This precedent is of vital strategic importance for the Dominican Republic, in order to achieve energy independence and the transition to environmentally friendly primary sources of power generation.
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