Rising sea levels. Coral bleaching. Unpredictable tropical storms.
These are just some of the environmental impacts associated with climate change—and the Dominican Republic is vulnerable to many of them. To help preserve its side of Hispaniola—the second-largest island in the Caribbean—Dominican officials have targeted a 25-percent cut in greenhouse emissions by 2030.
That’s a big number, but the government’s plan to turn wind into energy could help it achieve its ambitious goals. IFC, along with the Government of Canada, is supporting the effort with an $80 million financing package for the construction and operation of a grid-connected, 50-megawatt wind farm.
The new wind farm, called Parques Eólicos del Caribe S.A., or Pecasa, will diversify the Dominican Republic’s energy matrix and ease its dependence on imported fossil fuels.Today, fuel imports account for almost 80 percent of the country’s energy needs. This dependence has led to high electricity prices, which create a burden on the economy.
When completed in 2019, Pecasa will be one of the Dominican Republic’s largest wind farms. It is expected to reduce greenhouse emissions by more than 90,000 tons of CO2; equivalent per year, which is roughly comparable to taking 20,000 cars off the road.It will power over 151,000 households.
Planning for a Changing Climate
Development of the Pecasa wind farm is important as the Dominican Republic strategizes on how to maintain some of the strongest economic growth in Latin America and the Caribbean. With this growth comes energy demand—which has increased by 3.6 percent over the last five years. Investments in the country’s energy sector are crucial to sustaining this economic trajectory.
This private-sector led initiative behind Pecasa will help the Dominican Republic reduce its reliance on fossil fuels by adding wind power as an energy source. Pecasa will sell all its energy output to the government-owned power company, Corporación Dominicana de Empresas Eléctricas Estatales (CDEEE), through a dollar-denominated power purchase agreement for a 20-year term.
The $120 million wind farm will be located on the country’s northern coast, about 260 kilometers from the capital, Santo Domingo. The IFC-arranged financing package includes $18.5 million for IFC’s own account, $18 million from the Dutch Development Bank (FMO), $17 million from the IFC-Canada Climate Change Program (a partnership between the Government of Canada and IFC), $15 from million Proparco, the French development finance institution, and $11.5 million from the German Investment Corporation (DEG). Pecasa is owned by Paris-based Akuo Energy SAS.
In fiscal year 2018, IFC provided $8.4 billion, including a record $4.5 billion mobilized from other investors, to finance climate-smart projects like Pecasa. This accounted for more than a third of our total commitments for the year—including funds mobilized from others—and exceeded our target for 2020. IFC’s investments are expected to help our clients reduce greenhouse emissions by an estimated 10.4 million metric tons annually.
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Published in August 2018