Guatemala’s electricity sector, in its different areas (generation, distribution, commercialization and transmission), has been one of the main engines of development and growth for the country’s economy in the last decade.
Since 1996, private investment in the subsector has exceeded US$10 billion, with specific objectives in renewable energies. At the end of 2024, the installed capacity was 48.10% hydroelectric, 0.66% natural gas, 3.47% wind, 1.34% solar, 2.24% geothermal and 27.71% biomass, generating 83.53% renewable energy.
Local and foreign investment in the sector has not only allowed for meeting domestic demand but also to export energy. However, the growth in demand implies new challenges that require prompt investments. Otherwise, there is a risk of soon not being able to meet local demand, and more energy would have to be imported. In fact, Guatemala used to be an exporter par excellence, but today the need to import is more frequent.
Currently, we are on the verge of an open bidding process to contract power and electric energy for the supply of final distribution service users, known as PEG-5-2025. This is one of the most important processes in Guatemala’s electricity sector, and perhaps the most relevant since the General Electricity Act came into force.
Through this bidding process, Guatemala’s largest electricity distributors (DEORSA, DEOCSA and EEGSA) will contract around 1,500.00 MW through Power Purchase Agreements (PPAs) for up to fifteen years, as in previous bidding processes. The process would take place in mid-2025 and, when concluded, could cover the demand for the next fifteen years, as was achieved with the previous processes known as PEG-1 to PEG-4.
Surely, the bidding conditions will provide for construction and investment in new plants, which benefit the country in activities such as construction, operation and maintenance, as well as project financing, among others, boosting the economy with local and foreign investment.
We also understand that this tender will be international and allow bids in all technologies, i.e., renewable resources such as solar (photovoltaic), hydroelectric, wind and geothermal, and non-renewable resources such as natural gas, bunker, coal and other fossil fuels.
Public institutions such as the Ministries of Energy, Environment and the Interior, as well as municipalities, to mention a few, will play a very important role in the process, as they oversee granting permits and licenses. Many times, this type of project is unnecessarily bogged down in paperwork of such agencies. In the case of the Ministry of the Interior, it must also ensure the protection of these investments. On the other hand, these and other investments make it necessary to rehabilitate and improve infrastructure such as ports and roads. Otherwise, it will be more difficult and costly to implement potential new projects.
In addition to the PEG-5-2025 tender, it is urgent to carry out tenders to develop power transmission (PET). Even with robust generation and distribution projects, the system will be deficient if the highways through which energy circulates are insufficient or non-existent.
We hope this tender takes place in the coming months and will be a success, as previous processes have been for the benefit of the electricity sub-sector and, above all, for the benefit of Guatemala.
Rafael Briz
