A Powerful Connection: Project Hostos to Link DR and PR Energy Grids

SAN JUAN, Puerto Rico – February 27, 2026 – In a landmark move poised to reshape the Caribbean's energy landscape, the Caribbean Transmission Development Company (CTDC) has secured a U.S. Presidential Permit for Project Hostos, a monumental $2.5 billion private infrastructure initiative. The project will create a 500-megawatt high-voltage direct current (HVDC) submarine interconnection, transmitting power from the Dominican Republic to a long-suffering Puerto Rican grid, with operations slated to begin in 2031.

The permit, granted by the U.S. Department of Energy after a comprehensive interagency review, is the critical federal green light for the first-of-its-kind energy bridge. It authorizes the construction and operation of transmission facilities across the Mona Passage, the turbulent waterway separating the two islands, and unlocks a new chapter for regional energy cooperation.

A Lifeline for a Fragile Grid

For years, Puerto Rico's residents and businesses have been plagued by an unreliable and expensive electrical system. Decades of underinvestment, compounded by the devastation of hurricanes like Maria, have left the island's grid fragile and prone to frequent, widespread blackouts. Project Hostos is being presented as a direct, powerful answer to this crisis.

The project's core is the delivery of firm, dispatchable power—a consistent and reliable energy supply that can be ramped up or down as needed. This stands in stark contrast to the island's current dependence on aging, inefficient, and often-failing thermal power plants.

"Project Hostos will provide the firm, flexible, and dispatchable baseload capacity Puerto Rico desperately needs to replace aging thermal plants, reduce blackouts, and enable the integration of more renewable energy," said Rafael Vélez, founder and President of Atabey Capital, the project's founding investor.

Beyond simply adding capacity, the project’s design introduces a new level of resilience. By geographically diversifying power generation to the neighboring Dominican Republic, the system is less vulnerable to a single storm devastating Puerto Rico's on-island generation. In the event of a hurricane threatening Puerto Rico, power could continue to flow from the Dominican facility. The 150-kilometer subsea cable is also bi-directional, creating the potential for Puerto Rico to send power back to the Dominican Republic if needed, fostering a mutually beneficial energy relationship.

The $2.5 Billion Private Blueprint

Perhaps one of the most remarkable aspects of Project Hostos is its financial structure. The entire $2.5 billion initiative is 100% privately financed, a bold departure from the traditional reliance on public funds or federal aid for critical infrastructure. This model is being championed as a potential blueprint for modernizing infrastructure across the Caribbean and other regions facing similar challenges.

The driving force behind this private-sector solution is Atabey Capital, a Puerto Rico-based investment firm. "Atabey Capital's early commitment to Project Hostos reflects our conviction that private capital must lead Puerto Rico's energy transformation," Vélez stated. "As a Puerto Rican company, we understood that our island's energy crisis requires bold, market-driven solutions that don't depend on scarce federal funding or the constraints of public-sector development."

The project's investment covers a new 500MW combined-cycle power plant in San Pedro de Macorís, Dominican Republic; 90 kilometers of overhead transmission lines in the DR; the 150-kilometer subsea HVDC cable; and a 6-kilometer underground connection to the Mayagüez Substation in western Puerto Rico. Strategic partners include Siemens Energy, which will supply the state-of-the-art power plant and converter stations, and the global engineering firm Jacobs, which has spent three years conducting marine and environmental surveys to optimize the cable's route.

According to Project Director Tirso Selman, building in the Dominican Republic offers significant advantages. "Our development timeline and cost structure benefit significantly from building in the Dominican Republic, where permitting processes are more streamlined and construction costs are 25-30% lower than comparable Puerto Rico-based projects," Selman noted.

Forging a Caribbean Energy Market

The project’s name itself is a nod to a grander vision. It honors Eugenio María de Hostos, a 19th-century Puerto Rican philosopher who championed the idea of a "Caribbean confederation" built on shared prosperity and cooperation. Project Hostos aims to be a modern-day realization of that ideal, starting with energy.

This interconnection is more than just a cable; it's the foundational piece of a potential integrated Caribbean energy market. By linking the grids of the region's two largest island economies, it establishes the technical and commercial framework for future expansion and cooperation.

Dominican officials have embraced this vision. "The Hostos name itself...reflects our vision for this project," said Antonio Almonte, Minister of Energy and Mines of the Dominican Republic. "This Presidential Permit allows an interconnection that will transform the Caribbean energy landscape by demonstrating that our islands are stronger together. As we advance toward regional integration, Project Hostos establishes the technical and commercial framework for a true Caribbean energy market."

Balancing Power with Progress

The technological and environmental benefits are central to the project's value proposition. The new combined-cycle plant, supplied by Siemens Energy, will use modern gas and steam turbine technology that is roughly twice as efficient as Puerto Rico's existing legacy steam units.

This efficiency leap is projected to yield up to $300 million in annual operational savings for Puerto Rico's energy system. Furthermore, CTDC estimates that by displacing older, dirtier generation, the project will reduce carbon emissions by a staggering 3.8 million tons annually. The plant's fast-ramping capabilities will also provide crucial grid stability, helping to balance the intermittent nature of solar and wind power and enabling Puerto Rico to more effectively pursue its renewable energy goals.

The economic ripple effects are expected to be substantial, with projections of over 1,500 construction jobs and a $150 million economic impact during the build phase. Once operational, Project Hostos is expected to provide reliable power to the equivalent of more than 600,000 Puerto Rican homes, marking a tangible improvement in daily life and a significant step toward a more stable, resilient, and interconnected Caribbean future.