The electricity market is growing steadily, and the range of investment and financing options continues to expand. Recently, our team participated in the renewable energy convention, Renpower Central America 2024, the most important in the region.
The convention was held in the context of energy transition and security in the northern region of Central America (Guatemala, Honduras and El Salvador). Here, we share the most relevant information you should know.
PEG-5 Bidding and Other Renewable Opportunities
The Minister of Energy and Mining of Guatemala, Víctor Hugo Ventura, updated the public on the state policy to promote the energy transition, establishing clear objectives to reach 80% of renewable generation within the energy mix.
Ventura stressed the need to increase the transmission grid in different voltages to facilitate supplying demand, boost the transition to electromobility and develop smartgrids. He highlighted the planning of a route to promote and produce green hydrogen, with important fiscal incentives in both the construction and operation stages.
The Minister analyzed the emergency that the country is experiencing due to the climate crisis, which has caused a decrease in water resources and other renewable sources, increasing the need to supply with other technologies. He emphasized that the emergency has been handled in a timely manner, but that, due to the growth in demand, it is necessary to increase the supply..
Finally, in Q3 of 2024, the government will launch the tender for the award of long-term supply contracts to cover the demand of distribution companies. This tender, known as PEG-5[1], foresees bidding between 1,000 and 1,200 megawatts (MW), with a special call for investment in geothermal and natural gas plants.
You can read the Minister’s presentation at this link.
Implementation of Storage Technologies
On May 21, 2024, the National Electricity Commission (CNEE) issued Resolution CNEE 128-2024. This commission is the governing body for the specialized regulation of the Guatemalan electricity system.
This resolution grants legal certainty to the participation of autonomous hybrid generation (GHA[2]), based on storage systems, so that they can participate in the wholesale electricity market. This ensures that they can provide an efficient firm offer (maximum amount of power that can be committed in contracts to cover demand) and complementary services necessary to guarantee the reliability and stability of the system.
Marcela Peláez, Director of the CNEE, summarized the contributions of the new regulations as follows:
1. Enabled Services:
2. Contractual Opportunities
3. GHA Requirements:
Resolution CNEE-128-2024 entailed the modification of several Commercial Coordination Rules (NCC) and Operational Coordination Rules (NCO), allowing storage systems to be considered for PEG-5. This facilitates the supply of low-cost energy during the system's peak hours, in addition to creating investment opportunities at different points in the supply chain.
Other Innovations
During the conference, the importance of solar energy growth in the region was discussed, as well as transition technologies such as natural gas.
Emphasis was placed on the need for flexible generation plants that can be based on wind energy production, complemented with storage technologies or natural gas engines to cover their intermittency. This will help to maintain a balance in generation and improve plant capacities and energy security.
The use of electric motors, known as eFuel, which are highly efficient and have low emissions, was also highlighted. These may represent an important step towards decarbonization in relevant sectors such as maritime transportation and the adaptation of industry to environmental commitments.
The Guatemalan electricity market will continue to grow. It is important to improve the transmission network, diversify the energy mix with a greater presence of renewable energy, meet the country's climate commitments and ensure supply in the face of increased demand.
With regulatory advancements, the incorporation of the GHA and the upcoming launch of PEG-5, several investment and financing opportunities in sustainable projects have been created and should be considered.
If you have any questions or would like to know more, please do not hesitate to contact us.
[1] Bids under the Generation Expansion Plan (PEG)
[2] Autonomous Hybrid Generation (GHA): "It is the attribute of a solar photovoltaic or wind renewable energy generator, which has its own storage system located at the same site and point of linkage to the SIN of the generating plant. It uses all or part of the generator's output for energy storage purposes, without withdrawing energy from the power system for storage charging. The loading and unloading of the storage system are under the coordination of the AMM, in order to ensure the minimum operating cost of the system. The treatment of energy production and generator potential will be done as a whole power plant, solar photovoltaic or wind generators and storage system". (Article 3 of Commercial Coordination Rule No. 1).