Problem
You want to deploy your project in a server (dreamhost), that also hosts your git repository. When you try to do that by only setting the set_repository, you get errors like ‘permission denied, please try again’, even though if you try to checkout the git repository on your server works.

Solution
Set your :repository as a file in your host as in:
set :repository, "file:///home/username/git_on_server/projects/repo_name.git"

Then also set up your local_repository, as in:
set :local_repository, "user_name@server_domain_name:/home/username/git_on_server/projects/repo_name.git"