Page 124 - STRATEGY Magazine (G)

The legal environment in which the energy sector operates “makes it more attractive to investors, both local and foreign, considering that it allows the development of the market in several ways: construction of private power plants, improvement of energy distribution, a supply chain that reaches rural demand, and minimum government intervention in the market, among others,” says Javier Novales of law firm Novales and Novales.
percent of the energy from the wood. Yet it remains the best option for the typical home, especially in rural areas, due to the high rate of poverty.
Outside investors are intensifying their focus on Guatemala and other Central American countries by assisting the region in the introduction of renew- able energy sources. In 2014,
President Obama and his adminis- tration created the Caribbean Energy Security Initiative (CESI), which facil- itates the financing of energy projects in the Caribbean and Central American countries.
Obama then pledged US $20 million in April of 2015 to the region to help pri- vate investors finance their clean energy projects. As oil prices drop, so does the need of these underdeveloped regions
to move toward a cleaner energy. Their
need is immediate, and therefore the ul- timate goal of a sustainable future takes a back seat. CESI provides the financing that is intended to create a cleaner glob- al future while still allowing local areas to meet their urgent needs.
A CALL TO ORDER
The Ministry of Energy and Mining stands as the main regulator and policymaker for the energy sector in Guatemala. As additional overseers,
the National Energy Commission and the Wholesale Market Administrator help govern generation, transportation, and distribution. The Electricity Law, enacted in 1997, governs that market. It states that the generation and trans- portation of electricity are free and do not require authorization from the state unless production exceeds 5 MW.
Many investment possibilities exist within Guatemala’s energy sector.
While there is a push toward renewable energies, Guatemala as a nation is still very dependent upon the energy sources that have existed for many years. The need for fossil fuels is still ver actively being cultivated, but Guatemala is also trying to reciprocate in the growing demand for greener and more renewable energy sources. SIEPAC expansions are underway that will require the creation of additional electricity regardless of
the source, and though oil is produced all over the world, it can be argued that there is more untapped oil potential in Guatemala than in many other regions. With a stable legal and financial climate, resources both green and hydrocarbon will require investment for many years to come in this growing nation.
Powering Up Potential
JAIME TUPPER
Guatemala is transitioning from a dependence on foreign oil to diversified sources of energy includ- ing solar, wind, and, in the future, natural gas. As the CEO of Energuate, a power distributor in Gua- temala, Jaime Tupper believes the capacity for growth and profit in the energy sector is burgeoning. Specifically, he asserts that there is a market space available for large investors: “We have several local and national power plants, but instead of having one market of 15 million people in Guatemala, a big player can have one market of 45 million people with a large regional plant.” Tupper contends that more interconnectivity between Central American nations will be a great advantage to big in- vestors. “If Central America is able to isolate its political issues and foster integration on energy, we would see a significant improvement.”
INVESTING IN ENERGY INDEPENDENCE
Tupper foresees cooperation from investors and government agencies throughout Central Ameri- ca. This could bode well for big investors, who “could move very aggressively in Central America because they are promoting the interconnection between Colombia and Panama—especially as the
CEO countries develop an efficient system with more compliant rules and regulations.”
Energuate
Attesting to the sector’s growth potential, Tupper points out that “most of the countries have tried to attract investors in order to continue this transformation of the energy metrics,” something investors can exploit to boost regional development in the energy sector.
In 2010, the Guatemalan government began to incentivize the diversification of the country’s energy resources to offset dependency on oil. The need for energy inde- pendence could mean intriguing prospects for big investors.
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