Honduras Strives for a More Diverse and Environmentally Friendly Energy Mix

Friday, February 12, 2016

In 2014 nearly 60% of the energy produced in power plants was generated by internal combustion engines, gas and steam plants (thermal generation), while the remaining 40% was renewable energy. With this scenario in mind, the national government is taking action to improve the operating conditions of the electric system in order to incorporate diverse energy sources by introducing new low environmental impact technologies consistent with a more sustainable supply, which responds to the needs of different productive and economic groups.

Regulatory Framework:

Honduras’ regulatory framework promotes the generation of energy through the use of renewable sources. The legal framework can be summarized as follows:

● Decree No. 70-2007, “Law for the Promotion of Electricity Generation with Renewable Resources” fostering the development of renewable energy and reform Decree No. 138-2013.

● Decree No. 144-2007, “Law for the production and consumption of biofuels” and reform Decree No. 295-2013.

● Decree No.404-2013, “Law of Electrical Industry”.

Investment Incentives:

• Priority dispatch for electricity generated by renewable energy projects.

• Tariff, import duties, sales tax, and income tax exemptions for the period of project study and construction on equipment, accessories, spare parts and temporary imports, and a temporary solidarity contribution imposed on net assets among others. These incentives span a ten-year period from the start of commercial operation for projects up to 50 MW.

Electricity Demand:

Current national electricity demand ranges from 1,200 to 1,400 MW. The national electric utility ENEE projects a change in the energy matrix with the addition of 49 small and medium-sized renewable energy generation projects approved by Congress, representing a total installed capacity of 700 MW to be implemented in the coming years.

Change in the Energy Matrix:

Since 2010, Honduras witnessed significant changes in its energy matrix, which currently supplies 48.9% of the country’s electricity from renewable sources, compared to 30% in previous years. Installed capacity totals nearly 1,914.6 MW, of which 32.6% (623.7 MW) accounts for hydroelectric plants, 51.1% (979.3 MW) for thermal plants, 8.4% (160.3 MW) for biomass plants and 7.9% (152 MW) for two wind farms.

Perspectives and Actions:

● Implement distributed generation schemes

● Increase the share and diversification of renewable energy

● Improve authorization management systems for enabling the study and development of energy projects.

● Join renowned international environmental initiatives

● Create more incentives for the development of small power generation projects

● Encourage dialogue between regulators and stakeholders in order to develop a proposal to eliminate barriers related to permit and licensing issuance for renewable energy projects

● Unify interagency cooperation efforts to promote energy education by training primary school teachers and students on energy and environment issues.