Panama’s National Energy Plan 2015-2050 suggests that up to 70% of country’s energy supply could be renewable in 35 years.

The generation matrix is highly dependent on hydroelectric resources (46% of installed capacity) and fossil fuels (42%) making Panama highly dependent on oil price evolution (it is a net importer) and rainfall regime, affected by the El Niño weather phenomenon that in recent years has caused significant droughts, causing a shortage of hydroelectric supply.

In addition, Panama’s National Interconnected System (SIN), which is the backbone of the electricity sector, is highly conditioned by the enormous distance between generation centers (province of Chiriquí, in the western zone) and consumption (Panama City and canal hub).

The energy matrix diversification need, guaranteeing supply and reducing price volatility, as well as complying with international commitments acquired by Panama in the Paris Agreement, has led to renewable energy sources slight introduction (wind and solar) and introduced natural gas into generation matrix.

The Public Services Authority (ASEP) regulated in 2012 the connection of clean private plants to national electricity grid, with bi-directional meters and the energy “netting” to satisfy electrical consumption of each participant and sell the surplus.

Distributed rooftop solar generation delivers real-time power during the day with an unproductive asset (the roofs) to achieve a minimum fixed cost of own power for 25 years, with proven technology and reliable supply during peak demand and nights, because user is not disconnected from network.

The growth potential in the country is evident, as individual and business decisions to generate clean and renewable energy accelerate.

Reality is that solar energy participation in national energy matrix is not relevant. It currently represents only 2% of electricity generation.

A report from the International Renewable Energy Agency (IRENA) in May 2018 suggests the following recommendations for Panama:

o Evaluate regulatory and financial incentives for solar and wind energy development;

o Develop a national strategy to improve planning and modeling of electrical systems with greater RE penetration;

o Identify new operating practices to increase network flexibility and reliability with a greater RE participation;

o Evaluate the regulatory interfaces between National Electricity Market (MEN) and Regional Electricity Market (MER);

o Examine how to develop the capabilities of Panama’s workforce to achieve 2050 renewable energy target;

o Develop a long-term plan for electric mobility and sector coupling.

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