Keywords: Guatemala, Economy, Renewable Energy
Renewable Energy Tech: Domestic and Foreign Industry Overview
For the last several years Guatemala has been looking to reduce its dependency on non-renewable resources. The top domestic priority is to address growing residential energy demands. Such demands are leading Guatemala to become highly dependent upon firewood. Guatemala is projected to generate 60% its domestic electricity from renewable energy sources by 2027.
Due to the high dependency on hydrocarbons for industrial purposes, Guatemala is categorized as a net importer of energy, with the United Kingdom (UK) as its largest investor in energy resources. Numerous UK investors such as: Ashmore Energy International, Actis, and Blue Oil are looking to favourably invest in the renewable energy sector.
Guatemala has become highly dependent upon hydrocarbons such as petrol and its derivate. However, local authorities have implemented significant measures to change the country’s energy matrix, promoting other sources of energy production. Future outlooks suggest that this shift will include both clean and renewable energy. However, the country’s high dependence on hydrocarbons still holds the country back from developing clean renewable energy.
Despite the high dependency on hydrocarbons economic growth has had a positive impact in Guatemala’s need for energy; mining demand has quadrupled since the mid 1980s. Several events have happened during this time, such as the electricity rationing during 1991, which led the government to sign contracts with private suppliers to meet the country’s power requirements. In 1992, the government signed a contract with Enron (USA) to build a 110MW plant in Puerto Quetzal (Pacific, 180km from Guatemala City). Guatemala enjoys high returns from Carbon tax trading.
Guatemala is making strong efforts to drop the price of electricity by 15% to 20%, however, it is unlikely that it will exceed a 30% drop. 65% of Guatemala's energy grid is based upon renewable sources such as hydropower. With growth and development, “Guatemala has developed their energy sector to become the sixth-largest exporting sector, and a prime destination of foreign direct investment” within the energy sector and agricultural sectors.
Domestic investors and investments are projected to have a significant impact on industry’s ability to influence the dependency on both renewable and non-renewable energy sources. However, domestic investors are looking favourable to invest in renewable energy sources, which are projected to yield positive returns in the next twenty to forty years.
Guatemala’s current geographical location, linking both North and Central America, provides the opportunity for both energy and economic diversification. Both of which are projected to yield positive results for future investors. Overall, the renewable energy sector is projected to have rapid growth and yield positive returns for investors both domestic and international. However, major industry instability within the oil and gas sectors could make the renewable energy market costly and unfavourable for foreign investors.
As with any developing country is stability of local legal and institutional structures. Corruption and the lack of security and social inequalities can be disruptive to potential investors in addition to potentially damaging returns on investments. As a developing country administrative processes and economic opportunities can be flagged down in bureaucracy. Moreover, recent labour laws and an unclear foreign investment strategy are making the country as a less than favourable country to invest in.
Current energy overview:
Current Chinese developments in both hydroelectric and geothermal energies are projected to have an immense impact on the Guatemalan renewable energy sector. Such projections are said to positively impact international trade deals and diplomacy with Canada, China, Indonesia, Japan, the United Kingdom, The United States, and Germany.
Guatemala currently holds the largest Solar PV Plant operation in Central America. Current Green Technology projections in Guatemala are rumored to spearhead developments in water filtration systems (Basin Management), hydroelectric grids, and solar technology. The Advanced Power Integrated Stations "GPTech APIS" is projected to continue to increase from 2016 to 2070.