Negotiations have started to evaluate alternatives for integrating the Mexican electricity market into Siepac.
Salvador Lopez, temporary president of the Electric Interconnection System for Central American Countries (SIEPAC) told Prensalibre.com that in the meeting they will start to assess the legal mechanisms that could be used to realize the integration.
A new regulation will allow for regional energy transactions to be made by auction in annual installments.
Operators subscribed to the Electrical Interconnection System for Central American Countries (SIEPAC) will have a policy to regulate contracts and firm energy rights for term contracts of up to one year, through means of the Regional Electricity Integration Comission (CRIE ).
"The region still needs to install at least 7,000 MW by the end of the decade and make investments of between $12,000 million and $18,000 million."
While in Panama the energy supply needed to meet the demand of its growing economy falls short, to the north of the region, in Guatemala, there is surplus energy but generators are unable to sell it due to the lack of regulations governing the futures contracts and because the Siepac (Regional Electricity Transmission System) project is still does not working 100%.
Businessmen have denounced the impossibility of signing contracts to buy power for terms larger than 12 months, because there is still no regional guidelines to regulate it.
There is no point having an electricity market if you cannot import power for periods longer than one year, this is what the industrial union in El Salvador is arguing, stating that "...
Although they have managed to link the last stretch of 32 kilometers which was missing from the electricity grid in the region, there is still not any regulation to define rates and market performance.
After several delays caused by problems related to easements and environmental claims, the construction and electrical connection of the 32 kilometers that were pending between the canton of Parrita and the district of Palmar in Osa, Costa Rica has been completed.
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.
EDITORIAL
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.
Starting October the Regional Electric Interconnection Commission will implement a pilot program to authorize priority supply contracts and reduce the cost of energy exports.
In the absence of long-term contracts for regional energy transactions, the Regional Electric Interconnection Comission "... asked the Regional Operator Entity (EOR by its initials in Spanish) to conduct studies to identify the levels of maximum power transfer for each country and for supply contracts to be authorized according to priority in order to reduce the cost of energy exports. "
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.
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.
Solutions have been found to the problems of easement and complaints from environmentalists, and the Electrical Interconnection System for Central America will be complete in its entirety in July.
The works on the last stretch of 32 km of the Electric Interconnection System for Central America (SIEPAC) in Costa Rica are 80% finished, after having suffered delays due to complaints about environmental damage and legal claims.
In the second half of 2013 Guatemala exported to Central America 378% more energy than in the same period of the previous year.
According to the National Energy Commission (CNEE) between July and December 2013 Guatemala exported to Central America 450.9 gigawatt hours (GWh), while in the same period of 2012 the figure was 94.5 GWh, in other words there was a 378% increase.
The transport of electricity between El Salvador and Guatemala through the Electrical Interconnection System for the Countries of Central America is limited to 170 MW.
This is despite the fact that the Electric Interconnection System for Central American Countries (Siepac) has capacity to transmit 300 MW, said Luis Herrera, manager of the Wholesale Market Administrator (AMM) in Guatemala.
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.
The Guatemalan San Diego Mill exports through the Siepac electricity based on hydro power and bagasse.
The energy which is transported through infrastructure of the Electrical Interconnection System for Central America (Siepac) "... is derived from two sources, water and biomass obtained from the use of sugarcane bagasse", reported of S21.com.gt.
"Of the 8,500 megawatts of power required in the region, El Salvador consumes one thousand and has an estimated growth rate of 3.5%," said Ottoniel Alfaro, project manager.
The Electrical Interconnection System for Central American countries will be a decisive factor in reducing the cost of electricity at the regional level.
According to Ibrán Bueso, a legal advisor for the National Electricity Company (ENEE) in energy, one of the objectives of consolidation of the Electric Interconnection System for Central American Countries (Siepac) is to strengthen the competitiveness of the region by reducing its energy costs.