Panama is facing the energy challenges of the past head-on with the solutions of the future. Infrastructure, diversification, and a new regulatory environment are defining Panama’s energy outlook. As witnessed in developing economies around the world, sustainability is the key to growth.
Panama’s plan includes $450 million for wind turbines and legislation to promote the manufacture, deployment, and operation of solar panels.
Published: May, 2015
In every developing country, the demand for power and the capacity to generate it are in constant conflict. To meet this challenge, Panama’s National Secretariat of Energy has developed the National Energy Plan 2009–2023, a long-term proposal with specific, if ambitious, goals to create a sustainable and resilient energy future.
Beyond the global call for sustainability, Panama’s energy policy must address obstacles that are specific to the country, including its geophysical and economic realities. Among these is the fact that 1.2 million Panamanians, or more than 30 percent of the population, live in the greater Panama City area, while most of the nation’s electric power generation comes from hydroelectric generators in the distant western provinces.
Transmission capacity and inconsistent power production have always been issues in Panama. Sixty percent of Panama’s generation capacity is hydroelectric; the nation has some 1,200 megawatts in installed capacity from water power—which exists largely on paper. Water is plentiful in the rainy season. During the dry season or in prolonged droughts, generation capacity drops significantly. Even more troubling, during the peak season, less than half of the power generated can be delivered where it is needed: into the load center in and around Panama City. The National Energy Plan addresses these issues with:
- Investments in increased transmission capacity domestically and as part of a greater regional solution
- A shift from larger hydroelectric facilities to smaller-capacity solutions for localized production
- An investment in diversity to support a mix of sustainable energy sources
The plan features the development of a robust energy infrastructure based on the construction of multiple substations, improved transmission lines, and the expansion of the power grid. According to the plan, 775 megawatts in additional capacity from 32 different projects will come online in 2016. Seventy-one percent of these projects are hydroelectric, maintaining Panama’s sustainable energy profile.
Capacity remains a problem. Two main transmission lines with a combined capacity of 300 megawatts bring power from the mountain provinces. A third heavy transmission line, which will provide an additional 300 megawatts, is due to become operational in 2017 and will connect the hydroelectric generation stations in the western part of the country to Panama City and the industrial areas surrounding the canal.