Guatemala (2012)

Source: REEEP Policy Database (contributed by SERN for REEEP)

This policy & regulatory overview is not updated anymore since 2015. We decided to keep it online due to high demand but would like to make you aware of the fact that it might be outdated.

Energy sources

Total installed electricity capacity (2010): 2,454.3MW
Thermal (fuel): 60%
Hydro-electricity: 31.5%*
Coal: 6-7%
Geothermal: 1-2%.

* Contrary to what happened in 2009, the winter of 2010 was influenced by La Niña, characterized by being extremely humid. Hydroelectric generation from January to April 2010 was 23.77%. During the period from May to October, hydroelectric generation accounted for 61.38%.

Guatemala produced 5.4 thousand barrels of crude oil per day in 2009.

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In 2008, Guatemala imported 23 million kWh.

With Belize, Guatemala is the only oil producing country in Central America. France-based Perenco produces the majority of oil in the country. Due to a lack of domestic oil refining capacity, almost all of their production is exported to the United States, and the country must import petroleum products.

One of the results of the rising dependence on imported oil has been the impact on the balance of trade. Currently the cost of fuel imports for power generation amounts to about 5% of Guatemala’s GDP, which slightly exceeds the power sector’s contribution of 4.6% to GDP.

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Extend network

National electrification rate (2010): over 85.3%
Urban rate: over 95%.
Rural rate: over 82%.

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Capacity concerns

In order to meet the power demand growth, expected to reach 8% annually, Guatemala must increase its installed capacity. The country needed a capacity of at least an additional 100 MW in 2011.  The country has made excellent progress in recent years in line with the economy but neither the development of domestic generating capacity nor transmission infrastructure has kept pace.  Despite substantial domestic energy resources, principally hydro, there has been a steady fall in the contribution of hydro to the country’s electricity production, falling from over 90% of generation fifteen years ago to less than half today.  The electric power network in Guatemala is characterized by:
- Inadequate transmission capacity to deliver power to end-users from new and planned power plants that are needed to meet the growing demand.
- A lack of transmission capacity to allow trade with regional countries, such as power purchases from Mexico in the near term.
- Insufficient reliability of the power supply system due to a critical dependence of large parts of the country on limited transmission lines, and
- Constraints to future potential investments in power generation.

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Renewable energy

Biomass, solar and wind energy are mostly used in isolated systems or rural areas.

Guatemala has the potential to generate 5,300 MW from hydro-electric power. Only 662 MW was exploited in 2006.

Geothermal energy
Guatemala has the potential to generate 1,000 MW through its geothermal potential. The installed capacity for geothermal energy generation is 33 MW.

Guatemala has been investing in biodiesel production in addition to the four ethanol plants that are already in production.  The country first biodiesel plant Mazat Agui S.A. opened in December, 2008. Most of this production is expected to be used domestically, as a substitute for the more than 600 million gallons of diesel consumed annually in Guatemala.

Biomass energy
Guatemala has the largest sugar cane mills and plantations in Central America. Guatemala took special measures to encourage the development of co-generation, which consisted of favouring long-term electric power purchases within a dual generation scheme (using both bagasse and oil derivatives) that also permitted production outside of the sugar cane season. Guatemala has an installed capacity of 200 MW of biomass energy.

Wind Energy
With the technical and financial assistance of the United Nations Environment Programme (UNEP), the Solar and Wind Energy Resource Assessment (SWERA) was developed in order to promote the use of wind and solar energy, minimizing the barriers caused by lack of information.

Two towers were installed to measure variables of wind, in the municipalities of Quesada-Jutiapa and Chiquimulilla-Santa Rosa. Both towers will be monitoring 9 sites with potential for wind power production.

Solar Energy
The annual value of global solar radiation for the entire country is on average 5.3 kWh/m2/day.

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Energy efficiency

Current energy efficiency programs in Guatemala are modest but the country has proposed an ambitious set of new targets for energy efficiency.

An Energy Efficiency Bill was presented to Congress in February, 2011.
The main provisions of this Bill are:
- The creation of the National Energy Efficiency Council (CONEE)
- The creation of the National Energy Efficiency Fund (FODEE)
- Mechanisms to promote Energy Efficiency Use.
- The National Energy Efficiency Award

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More than 60% of the hydropower generating capacity is owned and operated by the state utility INDE, which also owns and operates about 85% of the transmission network.

Thermo-electricity is mostly operated by private companies.

In December 1998, Unión Eléctrica Fenosa won the privatization auction for 80% of Empresa de Distribución de Occidente and Empresa de Distribución de Oriente, two distributors carved out of Instituto Nacional de Electrificación (INDE).

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Electricity market
Privatization of the energy sector began in October 1996 with the approval of the General Electricity Law (Decree 93), requiring the Guatemala Electric Company (Empresa Eléctrica de Guatemala Sociedad Anónima - EEGSA) and the National Institute of Electrification (Instituto Nacional de Electrificación - INDE) to be divided into separate commercialization, distribution, transmission and generation divisions.

The regulating framework of the Guatemalan electric power sector is based on a competitive market model at the power generation and marketing levels in which free access and a price system that reflects free supply and demand balances are favoured, since effective conditions of competition can occur in these segments.  Transmission and distribution are regulated activities. 

Coal market
Most coal consumption is used for the coal-fired San Jose power plant, the first coal-fired power plant in Central America, which was opened in December 1999. It uses imported low-sulphur coal and is operated by TECO Coal.

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Energy framework

In November 2003, the Congress approved the Renewable Energy Project Incentives Act. This law instructs the Ministry of Energy and Mines (MEM) to assess renewable energy resources and projects, study their investment requirements and award incentives (exemptions from customs tariff and value-added tax, income tax and tax on mercantile and farming firms during the first ten years of commercial operation).

Regulation of the Renewable Energy Project Incentives Act was approved in 2005 by the Decree No. 211-2005.

In December 2005, Guatemala signed the Declaration of Cancun joining a Central American initiative in which 11 country members implement a Mesoamerican Energy Integration Programme. The core objectives of the program is to carry out actions to promote efficiency and rational use of energy, harmonize regulations, and develop projects to integrate the policies and program of the different member countries to enhance energy security in the region.

Guatemala is also embarked in the development of a new rural electrification program to “mainstream” renewable energy as a standard option of rural electrification efforts. This effort has led to major advances, paving the way for accelerated growth in rural electrification coverage from 53.3% in 1996 to 83% in 2002.

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Energy debates

The government is involved in the development of the Energy Matrix Program 2008-2022, which states as its main goal to decrease Guatemala’s dependence on petroleum by 2022.

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Energy studies

The SIEPAC project will integrate the electricity network of the country with the rest of the Central American countries, which is expected to improve reliability of supply and reduce costs.

Proponents of SIEPAC expect that interconnecting the nations' electrical transmission grids will alleviate periodic power shortages in the region, reduce operating costs, optimize shared use of hydro-electric power, create a competitive energy market in the region, and attract foreign investment in power generation and transmission systems. It has been claimed that the cost of energy for consumers could go down as much as 20% from US$0.11 per kWh to US$ 0.09 per kWh as a result of the project. A feasibility study undertaken in 1995 by Power Technologies Inc. outlined various scenarios for the expansion of power demand and supply in the region and associated investments. The median scenario foresaw that SIEPAC would induce annual investments of US$700m over a 10-year period once the regional electricity market had begun operating.

SIEPAC is expected to create a 1,125-mile 230 Volt transmission line, with a planned capacity of 300 MW between Guatemala and Panama, as well as improvements to existing systems. SIEPAC will likely involve upgrading links and building 230 kV links between Guatemala and Honduras, and Honduras and El Salvador.  It is expected to be operative by the end of 2009.

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Role of government

The Ministry of Energy and Mines design policies and programs in the energy sector.

The Ministry of Environment and Natural Resources.

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Government agencies

The Environmental Law and Sustainable Development Institute.

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Energy procedure

The Dirección General de Energía (DGE) and the Dirección General de Hidrocarburos (DGH) within the Ministry of Energy and Mines are in charge of energy sector policies. The DGH also controls and supervises the private companies involved in the hydrocarbon sector under the current Hydrocarbon Law.
- The Energy and Mining Policy (2008 – 2015) was approved by the government in 2007.1
- The specific objectives established by this Policy are:
- Enhance the country's energy supply at competitive prices.
- Diversify the country's energy matrix prioritizing renewable energy.
- Promotion of competition and investment.
- Promote sustainable development from renewable and non-renewable resources of the country.
- Increase Energy Efficiency
- Promote Energy Integration

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Energy regulator

The National Electric Power Commission (CNEE) was created in 1996.

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Degree of independence

The National Electric Power Commission Board is composed of 3 members appointed by the Government for five years. Members represent the Universities, the Ministry of Energy and Mines and the wholesale market participants.

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Regulatory roles

The National Electric Power Commission establishes and implements standards and regulations to safeguard consumer interest by regulating electric generation, transmission, and distribution service providers. CNEE will also regulate licenses and quality of service standards at all levels of the electric power market.

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Regulatory barriers

The main barriers for the development of Energy Efficiency in Guatemala are:
- Absence of a political platform
- Lack of standards and labelling for equipment
- Lack of incentives
- Theme not high on the agenda
- Lack of training, technical and economic information and dissemination
- Lack of state entities, formally created and directly involved in the issue
- Lack of programs and allocation of resources to EE programs

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Ministerio de Energia y Minas. Subsector Electrico de Guatemala. Available at: [Accessed 18th September 2013]

Comision Nacional de Energia Electrica. Statistical Report 2011. Mercado Mayorista de Electricidad de la Republica Guatemala correspondient al ano 2010. Available at: [Accessed 18th September 2013]

IEA Energy Statistics (2009). Available at: [Accessed 18th September 2013]

CIA World Fact Book. Guatemala Economy. Available at: [Accessed 18th September 2013]

Encyclopaedia of Earth. D Langdon. Content from EIA. Energy Profile of Central America. Available at: [Accessed 18th September 2013]

ECLAC. Centroamerica: Estadisticas del subsector electrico 2010. Available at: [Accessed 18th September 2013]

World Bank. Guatemala Energy Security Project Information Document. June 2009. Available at: [Accessed 18th September 2013]

Embassy of the United States of America in Guatemala. Press Release 3 December 2008. Available at: [Accessed 18th September 2013]

ECLAC. Renewable Energy Sources in Latin America and the Caribbean: Situation and policy proposal. 2004. Available at: [Accessed 18th September 2013]

Comision Nacional de Energia Electrica. Eficiencia Energetica Avances en Guatemala. April 2011. Available at:,%20ARIAE,%20RD,%208%20ABRIL%202011.pdf [Accessed 18th September 2013]

Inter-American Development Bank. IDB Country Strategy with Guatemala. December 2004. Available at: [Accessed 18th September 2013]

Ministerio de Energía y Minas. [Accessed 18th September 2013]

Comisión Nacional de Energía Eléctrica. [Accessed 18th September 2013]

Instituto Nacional de Electrificación (INDE). [Accessed 18th September 2013]

Política Energética y Minera 2008 – 2015. Available at: [Accessed 18th September 2013] Close References