Guatemala is the second largest Central American power market, with a total generating capacity of 4.2GW. In 2016, it generated 10.9TWh of electricity, 41% of which came from fossil-based generation. Large hydro is the next most important source, representing 24% of total power produced. Renewables (small hydro, wind, solar, biomass and geothermal) accounted for 35% of generation.
Guatemala holds auctions to award contracts for electric output and power, in which renewables may have either a specific quota or compete with other technologies. In addition, the country offers a range of tax incentives to clean energy projects, as set by Decree 52-2003. These include fiscal incentives for renewable projects and tax exemptions for the import of related equipment for 10 years. Net metering is also allowed in the country. As of September 2016, 1,580 self-producers with a total installed capacity of 10MW were connected to the grid.
The power market in Guatemala is unbundled, with both state and private players acting in generation, transmission, energy trading and distribution segments. The Ministry of Energy and Mining oversees planning for the electricity sector, while the National Electricity Commission (Comisión Nacional de Energía Eléctrica, or CNEE) is in charge of regulation. Additionally, the Wholesale Market Operator (Administrador del Mercado Mayorista) organizes the system’s dispatch based on marginal cost of generation.
Guatemala is connected via the Central American Electrical Integration System (SIEPAC) to Honduras and El Salvador. In 2015, the country exported 843GWh via SIEPAC. This figure represents over 60% the total electricity exported in the system. Northern Guatemala is also connected to Mexico’s transmission system.
Since 2012, CNEE has held tenders to contract power capacity. Distribution companies are the offtakers. The first tender awarded a total of 393MW to small hydro (221MW), wind (101MW), solar (55MW) and biomass (16MW) plants under 15-year power purchase agreements. A second tender, in 2014, aimed to contract 250MW, open to all technologies. The auction contracted 322MW. This time, wind projects did not secure any contracts, as their pricing was not competitive, but solar, biomass and small hydro bidders were awarded 116MW.
The auctions have been the main driver for renewable energy investment in the country, resulting in a record year for clean energy committed funds: in 2014, a total of $702m was invested in biomass, solar, small hydro and wind plants. Investments decreased sharply in 2015, when only the solar sector received a total of $66m.
In 2015, the first auctioned projects started to come online. The country’s first wind farm, of 53MW, was commissioned in April, and a 23MW wind farm came online in December. Additionally, two large-scale PV plants (30MW and 50MW) and four hydro plants (totaling 40MW) were commissioned, increasing the country’s renewable share.
Performance over time
- Overall Rank
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