The Electricity Market in Central America

Central America’s energy matrix contains an increased amount of hydrocarbon based generation, while the regional interconnection promises to reduce costs through economies of scale.

Monday, August 13, 2012

In the past two decades Central America has not been too successful in achieving sufficient electricity generation with a stable supply at competitive prices.

The regional matrix generation has changed from 66% hydroelectric, 30% thermal, and 4% renewable in 1990, to 41% hydroelectric, 47% thermal and 13% renewable in 2008.

Over the six countries, the electricity sectors and the structure of the market vary widely, ranging from fully competitive wholesale markets to monopolistic utilities that act as a single buyer. The region is divided into six sub-markets, each with different levels of economic development, energy infrastructure and energy preferences. However, the electricity market in Central America has the potential to benefit from economies of scale.

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Barriers to Regional Energy Interconnection

July 2011

Interconnecting Mexico, Central America and Colombia is no easy task, and the Darien obstacle is one of the largest.

More than 40 indigenous groups are connected to the Panamanian territory, and discussions and consultations are being conducted with them seeking authorization for the project feasibility studies.

Electricity Interconnection Scheduled for March 2012

December 2011

Works on the Central American Electricity Interconnection System (SIEPAC in Spanish) are reported to be 95% complete, and are expected to be operational in March 2012.

At a cost of $490 million, the interconnection line extends from Guatemala to Panamá, with capacity to transport between 200 and 300 megawatts of electricity.

Central American Electrical Interconnection to Begin in 2010

March 2009

Service problems in Costa Rica and Honduras are holding back implementation of the proposed Central American electrical interconnection.

Issac Castillo, manager of Transmisión Eléctrica S.A., announced in Prensa.com: "The electricity interconnection line in Central America will begin operations in sections beginning in 2010.

$16.7 million for electrical integration in Central America

December 2008

CAF approved $16.7 million to partially finance the Electric Interconnection System for the Countries of Central America, the multilateral organism reported today in a release.

These resources will be used to "contribute to the integration and development process in the Meso-American region (...) providing greater and better coverage for electrical services and to unite the markets in the sector," explained Enrique Garcia, executive president of CAF.

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