Panama’s first gas-fired power plant is set to come online by 2018 as construction work began last week.  

The $1.15bn, 381 MW combined-cycle plant is to be built by US-based power firm AES in collaboration with Panama’s Inversiones Bahia. Korean EPC firm Posco E&C will carry out the construction work.

The plant will be located on Telfers Island in the Caribbean province of Colon, around 80 km north of Panama City, and will include a 170,000 m3 liquefied natural gas (LNG) storage and regasification facility, with LNG provided by France’s Engie under a 10-year agreement. 

The plant’s power will be sold to Panama’s state-owned utility Empresa de Transmisión Eléctrica SA (ETESA) under a 10-year power purchase agreement, and is expected to power around 15 million households.  

Panamanian president Juan Carlos Varela officially opened the beginning of construction last week, saying the plant would reduce the nation’s dependence on oil and boost its generation capacity by 30 per cent. 

On winning the tender for the plant in September 2015, Andrés Gluski, president and CEO of AES, said: “Together with our local partner, Inversiones Bahia, we will construct a low emission combined cycle power plant, which will be fueled by LNG via the new regasification terminal on Panama’s Atlantic coast.

“Building a state of the art LNG regasification terminal near the entrance of the enlarged Panama Canal will enable Panama to become an energy hub for Central America and the Caribbean,” he added.

Panama’s 2015-2020 National Energy Plan includes a focus on natural gas for the first time. Hydropower is the nation’s largest source of energy, contributing 53 per cent of the total generation mix, with oil-fired plants contributing 40 per cent.  

Under the Plan, Panama aims to generate at least 70 per cent of its power from renewable sources – largely hydropower, solar and wind – by 2020, and to reduce energy sector emissions. Environmental considerations were key for the new plant, AES said.