The Electricity Sector in Central America

A Fitch report blames high regulatory risk as the main problem for regional private investment in generation and distribution of electricity.

Tuesday, March 8, 2011

Executive Summary of Fitch´s Special Report on the Power Sector of Central America and the Caribbean:

The electricity sector in Central America and the Caribbean reflects a strong link with regional government’s performance due to socio-economic and regulatory aspects which characterize these countries. While on the medium term the region provides significant investment opportunities to increase power generation, state intervention in the sector is high, considering subsidies, state involvement in the industry´s infrastructure and involvement in the establishment of tariffs, which represent one of the main challenges to attracting private investment.

The matrix of electricity generation of Central America and the Caribbean reveals the region's high exposure to changes in oil prices, taking into account that on average more than half (54%) of the power generated is from thermal sources.

The exposure is much greater when considering the fact that regional countries lack oil reserves and rely on fuel imports to meet the demand from generators. While countries like Costa Rica and Panama generate mainly from hydroelectric sources, this also brings vulnerability to weather events and, in general, demand investments by governments in order to provide system safety margins to avoid shortages in periods of low hydrology.

Given the projected growth by the region and the low margins of oil reserves, large expansion plans are in the works, especially in renewable sources, involving significant investment. The effort to attract the necessary financing for these investments must include the establishment of transparent and stable regulatory frameworks.

In the medium term, the completion of the regional transmission line in Central America (Electric Interconnection System for Central American Countries - SIEPAC) could allow the sale of surplus power among Central American countries, including Colombia and Mexico. In the case of the Dominican Republic, the expansion in capacity and efficiency will be keys to meet the projected demand for energy.



Market Intelligence

Everything about Electricity imports in Central America.

Top importers - Quantities, amounts and prices.

more info

More on this topic

Regional Energy System Operating at Half Speed

August 2014

The absence of regulations defining rates and market operations prevents the region from taking advantage of the energy that Mexico will be able to export under the new energy law.

As Mexico prepares to increase its power generation and export surpluses, the lack of a legal framework establishing the conditions for selling energy through the Electrical Interconnection System for Central America (SIEPAC) is delaying the possibility of accessing less expensive energy.

The Regional Electricity Market

August 2014

Analysis of the current state of the SIEPAC project and business opportunities in the region especially in electricity generation.

The Regional Electricity Market (MER by its initials in Spanish) is not only a key element to the growth and economic development of Central America, but also an important source of business opportunities for companies.

Analysis of Electricity Sector in Central America

July 2014

In 2013 63% of the electrical energy fed into the transmission networks in the region was generated from renewable sources.

From a report entitled "Central America: production statistics for the electricity subsector, 2013", prepared by the Economic Commission for Latin America and the Caribbean (ECLAC):

El Salvador’s Electricity Sector

September 2009

Fitch Special Report: Industry Risks and Challenges for the New Government.

Overview
El Salvador’s electricity sector exposure to government intervention and regulatory uncertainty during recent years has affected the financial performance of the companies in the sector. The impact of government intervention has been somewhat mitigated by recent measures taken by the current administration to eliminate energy

 close (x)

Receive more news about Energy

Suscribe FOR FREE to CentralAmericaDATA EXPRESS.
The most important news of Central America, every day.

Type in your e-mail address:

* Al suscribirse, estará aceptando los terminos y condiciones


Blue Marlin Beach Resort - Belize

Diving, Fishing, Snorkeling and relaxation resort in southern Belize. Situated on the island of isla South Water Caye the Blue Marlin offers accommodations, meals, all inclusive packages.
The resort is situated 14 miles East-South-East of...

Stock Indexes

(Jul 24)
Dow Jones
-0.31%
S&P 500
-0.11%
Nasdaq
0.36%

Commodities

(Jul 25)
Brent Crude Oil
49.160
Coffee "C"
136.15
Gold
1,255
Silver
16.411