Panama and hydroelectricity
Panama, officially the Republic of Panama, primarily relies on oil for its energy needs, with oil imports constituting 53% of its energy portfolio. Despite this, the country has increasingly turned to hydroelectricity as a more sustainable energy alternative since the 1970s. By 2021, hydroelectric power accounted for a significant portion of the nation's electricity generation, producing 8,342 gigawatts compared to 530 gigawatts from oil. The Panama Canal plays a crucial role in this energy landscape, hosting thermoelectric and hydroelectric plants managed by the Panama Canal Authority.
The government has undertaken reforms to improve energy infrastructure, including the separation of generation and distribution from the state-owned Electrical Resources Institute in 1998, and the establishment of the Energy Policy Commission. These reforms aim to enhance energy access and efficiency while promoting renewable energy sources. Although solar and geothermal resources have not been extensively utilized, investments in wind energy have been initiated, with the Penonome Wind Farm contributing to the growing renewable energy sector.
The Central American Electrical Interconnection System (SIEPAC) is another significant initiative, designed to connect the electric grids of Central America, including a segment running through Panama. Overall, Panama's energy landscape is evolving, balancing traditional fossil fuels with a gradual shift toward renewable sources, reflecting both economic growth and environmental considerations.
Subject Terms
Panama and hydroelectricity
Official Name: Republic of Panama.
Summary: Panama is largely dependent on oil imports, although hydroelectricity has become a popular alternative.
The primary source of energy in Panama is oil, making up 53 percent of the country’s energy portfolio. The majority of the country’s energy is imported, including virtually all its oil. One of the largest commodities (in tonnage) shipped through the Panama Canal is petroleum. The country has one oil refinery, near the port city of Colón. The country does not produce or consume natural gas.
Demand
Biomass accounted for more than 50 percent of energy consumption in Panama through the 1950s. This figure rapidly began to decline in response to fears associated with deforestation. However, even today, approximately a quarter of Panamanian homes still lack connection to the national power grid, according to the National Institute of Statistics and the Census. Overall energy demand doubled in percentage growth in the late 2000s. The increase in demand was largely related to growth in population and gross domestic product (GDP). With the rising demand, new energy projects and investments are actively being encouraged.
and Other Renewables
The country slowly began to substitute some of its fossil fuel use with hydroelectric power generation in the 1970s and has continued to do so ever since. The majority of electricity generation comes from hydroelectric power plants and thermal electric power plants. Much of the electricity that is generated is provided by the Panama Canal. The Panama Canal Authority (ACP) operates a thermoelectric plant and two hydroelectric plants. The ACP has an energy division to oversee the reliability and pricing of the canal’s power supply.
Hydropower provided 8,342 gigawatts of Panama’s electricity in 2021, compared to 530 gigawatts of oil-generated electricity and 497 gigawatts of coal-generated electricity. Solar and geothermal energy sources have not been largely exploited. Ethanol production based on sugarcane was becoming more prevalent, and other alternatives, such as palm oil, are showing promise. Panama’s Energy and Environmental Engineering Corporation funded construction of several wind farms in the early 2010s, with the Penonome Wind Farm coming online in 2014. By 2021, wind energy generated 530 gigawatts of electricity. Solar energy provided 586 gigawatts of electricity.
Government Reforms
In 1998, the Panamanian government separated generation, distribution, and transmission assets from the state-owned Hydraulic Resources and Electricity Institute (IRHE) and privatized several IRHE power plants. The state still kept its monopoly on energy transmission. The privatization was part of broader sectoral reforms. The state-owned Electric Transmission Service (ETESA) still has the primary responsibility for energy transmission. The reforms also resulted in the creation of the Energy Policy Commission (COPE) in 1997. COPE was established to guide energy policy. COPE shares this authority with the National Environmental Authority (ANAM), which is charged with examining the impact of policies on the environment. In 2012, the National Secretary of Energy was created, which set an energy strategy that included improved access to energy, taking advantage of the country’s renewable energy potential, and improved energy efficiency.
Energy Transport
The Central American Electrical Interconnection System (SIEPAC) has a mission of interconnecting the electric grid of Central America. The electric transmission line system runs from Panama to Guatemala. The concept of SIEPAC was first brought forth in 1987, with studies subsequently demonstrating the potential benefits and opportunities that such a network would provide. By 1995, planning for the SIEPAC project had begun. The Inter-American Development Bank provided a large part of the initial funding. The Spanish power company Endesa and the Central American Bank for Economic Integration (CBEI) also provided monetary support, with Central American countries providing in-kind contributions, such as existing facilities and infrastructure. Panama will have a 94-mile (151-kilometer) segment of the system, the shortest segment of the planned system.
The Trans-Panama Pipeline is an 81-mile (130-kilometer) oil pipeline built in 1982 to facilitate oil transport, as many crude oil carriers were too large to cross the Panama Canal. The pipeline was originally built to transport crude oil shipments from Alaska to refineries in the Caribbean and the U.S. Gulf Coast. Oil companies, however, began shipping Alaskan crude oil using other mechanisms, and the pipeline was shut down in 1996.
The pipeline was reopened in 2003 for the transport of Ecuadorian crude oil to the U.S. Gulf Coast. In 2005, Venezuela began talks regarding the reversal of the pipeline for shipments to China. British Petroleum (BP) signed an agreement in 2008, after which the pipeline was modernized and reversed. Construction on the Trans-Caribbean Pipeline began in 2006 and was completed in 2007. The first stage of the Trans-Caribbean Pipeline transports gas from Colombia to Venezuela.
Bibliography
"Panama." CIA World Factbook, 7 Aug. 2024, www.cia.gov/the-world-factbook/countries/panama/. Accessed 9 Aug. 2024.
"Panama." International Energy Agency, 2024, www.iea.org/countries/panama. Accessed 9 Aug. 2024.
"Panama." US Energy Information Administration, March 2016, www.eia.gov/international/overview/country/PAN. Accessed 9 Aug. 2024.
“Renewable Energy Potential of Latin America.” Global Energy Network Institute, December 2009, www.geni.org/globalenergy/research/renewable-energy-potential-of-latin-america/Potential%20of%20Renewables%20in%201atin%20America-edited-12-16%20‗Letter‗.pdf. Accessed 9 Aug. 2024.
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