Expect energy policy continuity under new Panama government

Panama’s new President José Raúl Mulino has inherited a robust energy sector which has seen an important migration to cleaner fuels and build-out of dispatch infrastructure.

The right-leaning head of state’s stepped-up pro-business platform is expected to add new impetus to the industry’s expansion, a process that began under his predecessor Laurentino Cortizo Cohen of the center-left Partido Revolucionario Democrático party.

The government plan of Mulino, from the conservative Realizando Metas party, looks to boost investment and establish a more streamlined and efficient public sector.

One litmus test will be participation in the country’s first long-term power supply auction for renewable energies, offers for which are due later this year.

Another indicator will be interest in the planned launch of a public-private partnership for the 330km fourth main power transmission line.

The country is also showcasing its potential as a regional green hydrogen hub due to its geographic location and canal.

RENEWABLES PUSH

A just released IDB study* highlights that renewables increased their share in Panama to nearly 67% from around 60% between 2015 and 2023, with the greatest contribution coming from hydro but with a notable increase in solar and wind.

The lender, however, points to the climate risk from the country’s dependence on hydropower.

To mitigate the impact of such risk, from drought, for example, natural gas-fired power production is coming online to increase flexibility, as well as provide baseload supply amid the incorporation of additional capacity from variable renewable energies.

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Information from public services regulator Asep shows that at end-May, there were 31 and 58 definitive and provisional solar licenses, respectively, and five definitive and provisional wind licenses each, all in different stages of development.

BNamericas’ Project Profiles team is tracking some 40 active power sector projects in early development and construction in Panama.

Other pending issues include service quality, further regional integration actions, and institutional strengthening, according to IDB.

On the legislative and regulatory front, there has been increasing traction related to electromobility, battery energy storage and distributed generation, and the overhaul of the power service framework.

Meanwhile, a meeting between Mulino and his Colombian counterpart Gustavo Petro included discussions related to a proposed power interconnection.

Forecast power demand in Panama (Source: State power transmission company Etesa)

Also read The problems Panama’s next president must tackle first

*IDB’s study is available in the Documents box in the top-right corner of the screen.