Feature: Can Central America become energy self-sufficient via renewables?

By the Potencia correspondent

Central America’s SIEPAC (Central American Electrical Interconnection System) is undoubtedly one of the most ambitious grid integration projects ever undertaken in Latin America- spanning from Guatemala to Panama – and is expected bring energy security to the region. However, countries here are now turning their attention to achieving energy self-sufficiency via renewable energy.

The Central American region is well recognized as having a wealth of renewable energy sources, in particular solar, wind, hydroelectricity and geothermal power.

A recent article by the German news agency DPA made the case that if renewable energy is an option to achieve energy self-sufficiency it would require each country’s government to support and stimulate these resources.

In the article, DPA quoted Ana Maria Majano, who is the former minister of Energy and Environment of the Salvadorian government and currently works as deputy manager in Latin American Center for Competitiveness and Sustainable Development, a section of INCAE Business School.

According to Majano, Central American countries were facing a growing demand for electricity with power systems that were still heavily reliant on fossil fuels, and that now was the time to change energy policies and give priority to lower carbon resources, such as renewables.

However, Majano claims that any new energy policies require a permanent collaboration between all the region’s nations, adding that SIEPAC, which is close to completion, has an important role to play in this regard.

Central America’s electric production in 2012 surpassed 44,000 GWh, according to DPA. Fifty per cent of that generation came from hydropower and 35.1 per cent from fossil fuels – mainly oil and coal.

In contrast geothermal plants provided only 8 per cent of the region’s production, with 4.1 per cent from sugarcane bagasse and only 2.7 per cent from wind power.

If the Central American region is serious about achieving self-sufficiency through renewables, having strong support from financing bodies for green power projects will be essential.

There are some positive signs in this regard. Salvadorian newspaper La Prensa Grafica reports that the Central American Bank for Economic Integration (CABEI) is shifting its focus to backing renewable energy projects, rather than more conventional ones.

Carlos Boj, a projects consultant at CABEI told La Prensa Grafica that the bank has opened a credit line valued at $40 million to finance non-conventional renewable projects, including small-scale hydropower plants, solar PV plants and wind farms.

The level of financing will obviously depend on the project, but generally part of the money is awarded as a loan, with the remainder given as a non-refundable fund that is considered ‘technical assistance’.

In El Salvador, the first tender to contract the output from non-conventional renewable resources has also been opened, and over 70 companies particpated in the bid.

El Salvador’s energy regulator SIGET (General Superintendence of Electricity and Telecommunications) and CNE (National Energy Council) both hope that it will be feasible to contract the energy from small-sized renewable energy projects.

Under the tender, a total of 4 MW should come from small hydropower plants (each producing 500 kW), 6 MW from solar power plants (400 kW each) and 4 MW from biogas (1 MW each).

There is a remaining 1 MW in the tender that is expected to be divided up between 2000 homes that produce their own solar power and export any surplus onto the grid.

In neighbouring Nicaragua, wind power is taking centre stage with a 37 MW, 18-turbine project that will primarily export its electricity to other nations in the region, Revista Eolica y del Vehiculo Electrico reports.

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