Caribbean Development Bank Approves US$34.8 Million Loan for Geothermal Power Plant in Dominica

Project Overview

The Caribbean Development Bank (CDB) has approved a US$34.8 million loan to the Geothermal Power Company of Dominica (GPC) to fund the construction of a 10-megawatt (MW) geothermal power plant. The project aims to strengthen Dominica’s energy security, reduce electricity production costs, and significantly lower carbon emissions in the power sector.

Background

Currently, Dominica imports over 90% of its energy, mainly in the form of fossil fuels. Approximately 70% of the country’s electricity is diesel-generated, driving energy costs and hindering business growth and progress towards key Sustainable Development Goals. However, Dominica, located in the Eastern Caribbean, has vast geothermal energy potential linked to its volcanic origin.

Geothermal Energy

Geothermal energy, derived from the earth’s heat, primarily in volcanic areas, provides a constant, 24-hour source of renewable energy—unlike solar and wind power, which are subject to variability. This makes it a critical solution for reducing diesel dependence among countries in the Eastern Caribbean that currently rely heavily on fossil fuels.

Project Details

The power plant construction in Dominica follows significant strides in developing its geothermal resources, including the drilling of production and re-injection wells. Estimates suggest that the island’s geothermal potential could provide electrical power capacity up to 50 times the current peak demand of approximately 18 MW.

Funding

CDB’s funding—with resources from the Inter-American Development Bank (through the Green Climate Fund) and the Government of Canada through Global Affairs Canada—covers 51% of the total project costs of approximately USD68 million, with the CARICOM Development Fund (CDF) contributing 22% and the remainder as equity from the GPC.

GeoSmart Initiative

This project is funded under CDB’s GeoSmart Initiative, which seeks to support countries with geothermal potential in the Organisation of Eastern Caribbean States (OECS) in developing projects with funding and technical assistance.

Quotes

“This plant will go a long way in helping Dominica achieve its sustainable energy goals and transition from fossil fuel-based electricity generation to entirely renewable sources,” said Therese Turner-Jones, the CDB’s Vice President of Operations (Ag).

Other OECS Nations

In addition to Dominica, other OECS nations have received support under the GeoSmart Initiative. A US$9.4 million grant has been approved for test drilling in Grenada, while St Kitts and Nevis received US$17 million in funding for drilling production wells on the island of Nevis. CDB previously provided US$27 million to support the completed geothermal exploration of Saint Vincent and the Grenadines.

Conclusion

By tapping its geothermal potential, the OECS is not only strengthening its energy security but also contributing to regional efforts to reduce carbon emissions and increase resilience to climate change. Energy affordability will help improve the competitiveness of these economies as electricity costs come down for consumers, households, and businesses. This marks a significant step towards a sustainable energy future for the Caribbean.

FAQs

Q: What is the purpose of the geothermal power plant in Dominica?
A: The project aims to strengthen Dominica’s energy security, reduce electricity production costs, and significantly lower carbon emissions in the power sector.

Q: What is the total project cost?
A: The total project cost is approximately USD68 million, with CDB’s funding covering 51% of the costs.

Q: What is the GeoSmart Initiative?
A: The GeoSmart Initiative is a program that seeks to support countries with geothermal potential in the Organisation of Eastern Caribbean States (OECS) in developing projects with funding and technical assistance.