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Guatemala remains committed to foreign investment in the energy sector. The National Indicative Plan anticipates investments of US $2.66 million in non-renewable energy sources and US $6.799 million in renewable sources by the end of 2022.
EXPANDING ELECTRICITY
Electricity is also being produced at an increasing rate. Guate- mala generated 8.15 gigawatt-hours in 2014, among the highest in Central America, yet there is room for further growth in production. Much of the nation’s production is from steam, gas, and internal combustion plants, though hydroelectric plants are gaining momentum as leaders from this region and around the globe begin to focus more on renewable energies. Guatemala
is a vital contributor to the Electric Interconnection System
of Central America (SIEPAC), a network that connects the power grids of six Central American countries and reaches 37 million consumers. The grid is 1,790 kilometers in length with a 300-megawatt (MW) capacity, a number that is expected to double in the coming years as SIEPAC continues to expand. Guatemala has also begun to plan a connection with Mexico’s grid that will not only allow for the further expansion of SIE- PAC, but will also enable Guatemala to export extra electrical capacity in the future.
To promote this expansion, the Guatemalan government has continued to issue power supply contracts to private companies, and the National Electric Law has helped to transform the market by opening up commercialization and distribution of electricity to major partners. Although the law was originally
intended to assist the three main investors in the market in
the 1990s, it has opened additional joint ventures that have assisted outside investors to become major stakeholders. Javier Novales, of law firm Novales Abogados, notes, “In this con-
text, it is important to bear in mind that the lack of resources and adequate infrastructure in neighboring countries is a key factor for Guatemalan power export and that the Guatemalan market offers very competitive regulation that allows for key long-term public-private partnerships to be available for the future. Currently, the United Kingdom is the largest investor in Guatemalan energy, with US $1.2 billion; more than half of that is invested in a coal plant that is currently under construction. Two geothermal-powered plants have also been added, as have additional hydroelectric generators. In 2014, 37 percent of the electrical grid was produced by hydropower, while wind and solar energy also added to the electrical output.
Unfortunately, as SIEPAC expands, some experts estimate that electricity costs may actually go up rather than become more affordable, thanks in large part to tariffs. Because of the exorbitant costs of electricity, 81 percent of Guatemalan homes use firewood as their main source of energy. This method is ex- tremely inefficient, however, as the three stone stoves that are most prominently used in Guatemala are believed to waste 90
FRATERNO VILA
General Manager Enertiva
CLEANING UP
An energy trailblazer in Central America, Guatemala provides power to neighboring countries and leads the way in innovation and technology, notes Fraterno Vila, the General Manager and founder of solar energy company Enertiva. “Guatemala has the lowest energy prices in the region because of new and more efficient power plants. The country is now an exporter.”
FAR AHEAD OF THE FIELD
Following Guatemala’s success, neighboring countries are using the nation as a model to address and improve their power in- frastructure and energy regulation. Some are only just now pri- vatizing energy generation, distribution, and transportation, a process Guatemala undertook two decades ago. Vila believes that as long as Guatemala continues to embrace technology, attract foreign and local investment, maintain its focus on renewable energy, and add more infrastructure to the grid, the country will remain the eminent innovator in the region for years to come.
“The Guatemalan energy market is a model for the rest of Central America. The energy reform started in 1996, and now we are see- ing the results—energy prices have come down drastically and our matrix has turned from mostly hydrocarbons to a hybrid mix of renewable energy sources and coal.”
A Greener Guatemala
Guatemala has emerged as a frontrunner in developing green energy in the region. It continues to reduce its dependence on hy- drocarbons while increasing reliance on hydroelectric, biomass, solar, and wind energy. According to Vila, solar energy offers po- tential for mass adaptation in Guatemala, given local regulation that allows net metering and the technology’s competitive level- ized cost of electricity versus the grid. In the future, the nation’s clean energy mix may include natural gas routed through a pro- posed pipeline from Mexico.
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