Advanced Power Sector Integration and Cross Border Trade in Electricity: Central America and SIEPAC

Monday, November 25, 2013

Enhance capacity for regional decision-making affecting Central America’s electricity system, with an emphasis on renewable energy generation connected to the Central American Electrical Interconnection System (SIEPAC) project. This program will seek to strengthen understanding, at both the national and regional level, particularly among governments of Central America, of the benefits of regional energy integration and create a more integrated planning structure to foster improved energy integration. Ultimately, this program seeks to strengthen SIEPAC, create an informed network of regional stakeholders and decision makers and increase political willingness and leadership in Central America to make necessary reforms and decisions pertaining to energy integration as evidenced by the passage of laws and reforms aimed at energy integration.

Central America has made great progress toward electric integration. The potential benefits have long been touted, particularly the economies of scale that may be facilitated as larger electric generation projects aim to tap into a regional market. Efforts to date have centered on interconnection of the region’s electric grid and the SIEPAC project. The project, formalized in the “Tratado Marco del Mercado Eléctrico de América Central,” includes a roughly 1,800 kilometer electric transmission line project which upon final completion will run from Panama to Guatemala and physically interconnect the electric systems of all the countries of Central America. The Treaty also spells out the creation of a seventh electric market. The Mercado Eléctrico Regional is a regional market known by its Spanish acronym MER that will permit exchanges of electric power across the existing six markets using the SIEPAC transmission infrastructure.