For the seven countries of Central America—Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama—a transition to renewable energy and low-carbon technologies is imperative. In addition to reducing greenhouse gas emissions, a robust renewable energy industry can stimulate the growth of clean energy manufacturing and help address regional problems such as an energy supply deficit, low rural electrification, and poverty.
Yet despite abundant renewable energy resources—including wind, solar, biomass, and geothermal—Central America remains highly dependent on imported oil, fossil fuel-based electricity, and unsustainable large hydropower. In the 1990s, deregulation of regional electricity markets opened the power sector to private investments, but it also paved the way for a surge in fossil fuel-based capacity, as most governments did not consider policies to promote renewables during the early stages of these reforms.
As the region’s economies expand, led by strong growth in Panama, energy demand is expected to surge. As a result, these countries will only become more vulnerable to high and fluctuating energy costs from imported oil.
Although Central America has come a long way in introducing programs to promote renewable energy, much more can be done. While the region is developing important utility-scale renewable energy projects that will increase energy supply, including a 102 megawatt (MW) wind farm in Cerro de Hula, Honduras; a 20 MW geothermal power plant in Amatitlan, Guatemala; and a 49.5 MW wind farm called Planta Eólica Guanacastein Costa Rica. But the effort to expand electrification in rural areas has received less investment.
Energy poverty and rural electrification in Central America vary greatly by country. According to the International Energy Agency, more than 7.7 million people in the region live without electricity, limiting their health care, education, and livelihood opportunities. Off-grid electrification projects offer great promise for these energy-poor communities, as they can be more cost-competitive, reliable, and rapidly built than grid-extension efforts or fossil fuel energy projects. Off-grid renewable energy can be a catalyst to dramatically improve the livelihoods of millions.
The food manufacturer Alimentos Campestres, based in Guatemala, demonstrates the opportunities that can come with increased access to affordable renewable energy. A 50-percent increase in the cost of propane prompted the company, which processes dried native fruits and vegetables, to implement a sustainability program that uses solar technology to power its drying plant.
The facility is located in a rural, arid region with poor agricultural opportunities. It relies on passive solar energy, using 400 square meters of solar thermal modules to capture heat for two dehydrators. In addition, two innovative heat-energy storage facilities, comprising 100 tons of rock each, accumulate and store thermal energy for future use. The use of solar thermal energy has displaced the plant’s fossil fuel usage, decreased its carbon dioxide emissions, and spurred job creation in the surrounding communities. The project has served as a model for the viable use of solar thermal elsewhere in Central America, and similar initiatives now exist for drying wood, flowers, and herbs.
Like many small-scale projects with direct impacts on rural communities, Alimentos Campestres’s transition to renewable energy was made possible with technical and financial support from international donors, such as Cona, the Central American Commission for Environment and Development, and the Energy and Environment Partnership with Central America. Although the costs can be high, the socioeconomic benefits of these types of projects make renewable energy an affordable option for small businesses and rural populations.
Although international financial institutions play key roles in supporting renewable development in Central America, Nicaragua, with one of the region’s most robust green micro-financingmarkets boasts 10 institutions providing support for more than three thousand low-income borrowers, is spreading clean energy initiatives to low-income rural areas.
In Nicaragua, with a national rural electrification rate of only 42 percent, some Nicaraguan communities remain isolated from the rest of the country, lacking both good communications capabilities and market accessibility. To address these challenges, the rural community of Cajiniquil developed an integrated hybrid wind and solar PV system, with assistance from organizations such as BlueEnergy, Asofenix, and Renewable World, and donations from the European Wind Energy Association, WPD Group, and International Power. The system comprises a 1 kilowatt locally constructed wind turbine, batteries to store energy for up to three days, and a back-up solar array that can charge the batteries. With its combined micro-grid and battery-charging station, the system will provide a regular energy supply to houses connected to the mini-grid—powering lights and a pump for clean water, improving community healthcare and education services, and enabling new small business opportunities.
The Cajiniquil project is a successful example of social investment, knowledge sharing, and technology transfer. The community was involved in all aspects of the project, from the initial design and construction to the formation of a gender-balanced committee to set up and manage the micro-enterprise that maintains the project over the long term.
Supportive policies for renewable energy continue to play a key role in extending power in regions with low rural electrification rates, such as Central America. Policies and regulations that implicitly promote off-grid clean energy are vital to the success of rural communities. At the same time, these policies should reflect the socioeconomic reality of rural and impoverished areas and create regulatory requirements and economic conditions that help, rather than hinder, electrification. Rural electrification has its own particular challenges, and to overcome them, a unique set of policies, regulations, and economic conditions must be crafted and applied.