On October 30, 2024, the Comisión Nacional de Energía Eléctrica (hereinafter, the “CNEE”) issued resolution number 270-2024, approving the Terms of Reference (TOR) for Distribuidora de Electricidad de Occidente, S.A., Distribuidora de Electricidad de Occidente, S.A., Distribuidora de Electricidad de Oriente, S.A., and Empresa Eléctrica de Guatemala, S.A. (hereinafter, “Empresa Eléctrica de Guatemala, S.A.”), Distribuidora de Electricidad de Oriente, S.A., and Empresa Eléctrica de Guatemala, S.A. (hereinafter, “the Distributors”) to prepare the Open Bidding Bases to cover the needs of the Distributors, under the provisions of the regulations in force.
Among the main points to be highlighted, this will be the largest generation bidding that has been carried out so far, covering between 1,200 MW and 1,400 MW. The awarded projects will have to start supplying power and energy starting in 2030.
Another relevant aspect within the TOR is the objective of the bidding, defined as “the contracting of the total requirement of power and electric energy that guarantees the coverage of the Firm Demand of the Distributors for the provision of the Final Distribution Service, for a term of up to fifteen years as from May 1st of the year of the beginning of the supply”.
In addition, two energy curves are defined and must be identified to be indicated in the Bidding Terms and Conditions:
- Base Block Curve: “It is the amount of electric energy of the total curve that constitutes the base of the electric energy to be covered during all the hours of the day of all the years of the supply period, concerning the total requirement of the distributors”.
- Complementary Block to the Base: “It is the amount of electric energy of the total curve resulting from the difference of discounting from the total requirements of the Distributors the amount of energy corresponding to the Base Block”.
These definitions, set by the CNEE, will determine the amount of power and energy necessary to cover the total demand. Likewise, they will significantly influence the technology required for the projects, defining who will be able to develop them.
Undoubtedly, it will be an interesting exercise that presents two major challenges:
- Transmission: For more than eight years no major tenders have been called for transmission in the National Interconnected System (SNI), so transmission lines have not been updated according to the needs of developed generation. Isolated construction of transmission projects has not provided the NIS with the necessary capacity to sustain generation and meet demand in the areas where it is needed.
- The end of the awarded contracts: At the end of the term of the awarded contracts between 2030 and 2033 and considering the five-year award limit established in these TOR, there will remain a renewable park, mainly, which may choose to inject its generation to the SPOT market or seek contracts with marketers or large users. These plants, with a useful life longer than the established term limit, will continue to be the plants called upon to generate, due to their efficiency and competitive costs.
Renewable technologies will continue to play a crucial role in the energy matrix of any country, as they do not have a high generation cost. However, they present uncertainty due to unpredictable climatic factors. Nevertheless, if they can be properly combined with non-renewable technologies, they could serve as a basis for the generation matrix, helping to reduce prices and dependence on fossil fuels, which are not available in all countries.
We will closely follow the issuance of the Bidding Terms and Conditions by the Distributors and we will observe if they provide greater clarity on the opportunities that are open for Guatemala.