By the Potencia correspondent

Panama‘s electricity supply system has historically relied heavily on hydroelectric power. However, this Central American nation is currently suffering a severe drought that is seriously threatening its electricity supply.

The draught is the result of a delay in its traditional rainy season, which usually arrives a month earlier. The lack of rain has drastically reduced the reservoir levels and has meant increasing the output from existing thermoelectric plants to maintain the energy supply. Other measures have also been taken.

The situation has become so bad that in early May the government ordered a reduction in the energy consumption in public buildings, such as government offices, supermarkets, restaurants, casinos, cinemas, etc. Over a period of several days these locations were forced to stop their activities between 10.00 pm and 06.00 am, Reuters news agency reported. Also educational centres were closed to reduce electricity wastage.

Panama’s economy is one of the fastest growing in Latin America, but its high dependency on hydropower sources could mean the country faces hard times – about 60 per cent of the Panamanian economy is linked to hydropower plants.

The Changuinola I hydropower station, located in the province of Bocas del Toro, is the country’s most important reservoir and one of the biggest in the region. The plant has an installed capacity of 223 MW and provides 15 per cent of Panama’s energy demand. Local newspaper La Estrella reported that this reservoir is currently almost at its lowest ever level.

The seriousness of the problem has spurred local government to buy electricity from neighboring countries through the Central American Electrical Interconnection System (SIEPAC). Through its transmission links, Panama is receiving electricity from El Salvador, Nicaragua and Honduras.

The majority of the supply is coming from the Salvadorian territory (80 per cent) with the rest of the imports coming from Nicaragua and Honduras (10 per cent each), according to a report by Efe news agency.

Rene Gonzalez, the executive director of the Regional Operating Agency (EOR) said in a statement that the region’s electricity market is providing Panama “a steady support of 80 MWh a day”.

According to the EOR, “Panama’s highest energy demand is about 1400 MW”. The SIEPAC has a highest demand of “approximately 7500 MW”.

Construction of the SIEPAC has cost almost $500 million. Such transmission links are letting Panama face the crisis but the country has to pay a very high price for it. An article in La Estrella suggests that the cost is between $30 million and $42 million a day.

One of the activities producing the highest electricity waste in the country, which has a hot climate, is the utilization of air conditioning devices. Initially their use was forbidden during eight hours a day as a measure to save costs, but now the minister of the Presidency Roberto Enríquez has announced the reduction of that time to five hours.

Thankfully the restrictions are expected to end shortly, according to Mexican agency Notimex, and that looks likely because the first rains have finally arrived.

On the other hand, another report by La Estrella said that Panama will pay a very expensive price for this crisis. Several experts consulted by the newspaper said that the energy purchased by the government in the casual market had a cost that was double the normal price. In addition, there is concern that the measures to cut the energy consumption has caused serious damage to the country’s companies, and therefore potentially the economy.

Eduardo de la Guardia is the manager of Pedregal Power, a company that provides thermoelectric energy. According to him, the energy crisis “was predicted several months ago” but the government did not take the necessary measures.

De la Guardia claims the most effective measures would have been to increase the output from Panama’s thermoelectric plants prior to the arrival of the drought. Thus it would have been possible to store enough water in the in the reservoirs to counteract the lack of rainfall.

The true effect of this power crisis will only be known in the months to come.

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