Electricity Integration Requires More Infrastructure

Transmission lines in the regional SIEPAC system are being used to distribute electricity internally in countries, curtailing their capacity for international exchange of energy.

Thursday, February 25, 2016

When the US President Barack Obama visited Central America in 2013, he warned that "energy costs in this region are three times what electricity costs in Washington, and that represents a huge disadvantage for companies".Two years before that, all countries, from Guatemala to Panama, were committed to creating the necessary infrastructure for the Regional Electricity Market (MER) to be efficient.

See: "Energy: Central America can not make long - term contracts"

But at this moment energy integration has two obstacles: the limited infrastructure to transmit renewable energy, and the "local" use that some countries are giving to transmission lines. According to analysis by Elfinancierocr.com, "... the promise to share at least 300 MW of power remains on paper: countries such as Nicaragua, El Salvador and Honduras use transmission lines in the system to distribute power internally within their own borders".

See: "The electricity that Central America Needs"

"... The situation not only limits the ability to share electricity with other countries, but slows down the development
of new projects such as the incorporation of variable energy (solar and wind) into the market" continues the report. Because of this, although the Interamerican Development Bank has already funded $250 million for half of the interconnection, the 300 MW of power from MER may not materialize until 2019.

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Mexico Wants to Export Electricity to Central America

September 2014

As part of the problems related to the regional market's lack of regulation, Guatemala does not enable the flow of Mexican energy through its territory towards the south of the isthmus.


Electricity imported from Mexico has a lower cost than that produced in Guatemala, which would allow it to be re-sold -or sell the energy produced from plants installed in their territory- to the rest of Central America, with a profit, because up to now electricity toll rates for using the SIEPAC have not been determined.

The Regional Electricity Market

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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

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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):

Guatemala Has Exportable Surplus of Electricity

November 2013

Guatemala is the most interested country in speeding up regulation establishing the model of firm contracts within the regional electricity market.

This was explained by Guatemalan Vice Minister of energy, Edwin Rodas.

The idea of this is to harness the Electrical Interconnection System for Central America (Siepac) not only for the sale of energy to other countries, but also to provide telecommunications services over optical fibers which these lines have.

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