New energy tender for Guatemala

Since the awarding of Tender PEG-4-2022 last year, there has been discussion about the need to launch a larger one, given that the country’s demand has increased, and the generation park and transmission system have remained stagnant in terms of growth and technological changes that benefit not only prices but also access to energy for the entire population.

The changing pace of this world and being more aware of climate changes has led countries to take initiatives to reduce pollution and make use of renewable resources, and the trend for energy generation has not been left behind.

The generation of this resource worldwide has followed the trend of installing more renewable energy, both solar and wind, at a rapid pace. This has stemmed from two aspects:

    1. The prices of materials and other equipment for the manufacture of solar panels and wind generation equipment have significantly decreased.
    2. The prices of fossil fuels have remained relatively high, with price spikes related to political aspects in some parts of the world.

These prices have also affected Guatemala, with a maximum SPOT cost recorded in December 2023 of $356.88 MW/h. Although this price was only for a few hours, we can see that renewable generation has not only not grown in recent years but also the effects of the climate have affected these technologies, and therefore, they have caused fuel prices to be a reference.

This tender process, which has been announced for several months, is undoubtedly an important step for Guatemala as it will incentivize renewable energy sources, but it can also promote investment in a base plant of a non-renewable technology, such as gas.

The challenge for our Central American countries is that we do not have exploration and extraction of said resource locally, or at least not yet, so we depend on international prices for the acquisition of this resource, and that, in total prices, are competitive and sustainable. Nevertheless, Panama and El Salvador already have gas plants serving as base plants to meet energy demand. Nicaragua is already in the final phase of the construction process of a gas plant of approximately 300MW, making it the third country in the region with such technology.

New technologies that are coming and may bring sources to ensure the supply of energy, such as batteries and hydrogen, should not be overlooked. The costs for battery development have also decreased exponentially, and efficiency has also improved their performance.

For Guatemala, it is important that the projects awarded in Tender PEG-4-2022 are built and operated in accordance with the conditions under which they were proposed. Additionally, every day that passes without the preparation and approval of the terms for the next tender, there is a risk of having high energy prices, the need to import energy, and, at some extreme, the need to ration the supply of this resource among consumers.