SIEPAC
Encyclopedia
SIEPAC is a planned interconnection
of the power grids of six Central America
n nations. Central America, where few electrical interconnections currently exist, and those that do are often old and unreliable, has been discussing plans to link the region's electricity grids since 1987. The proposed project entails the construction of transmission lines connecting 37 million consumers in Panama
, Costa Rica
, Honduras
, Nicaragua
, El Salvador
, and Guatemala
. It is not clear if Belize
, which buys much of its power from Mexico
, will also be included. SIEPAC would cost about US$320 million without the interconnections with Mexico (US$ 40m), Belize (US$ 30m) and Panama (US$ 200m). and, back in 2003, was scheduled for completion in 2006. More recently, it has been estimated it would be completed in 2009. There is controversy about the benefits and indirect environmental impacts of the project.
SIEPAC is expected to create a 1,125-mile 230 kV
transmission line, with a planned capacity of 300 MW between Guatemala and Panama, as well as improvements to existing systems. SIEPAC likely will involve upgrading links and building 230 kV links between Guatemala and Honduras, and Honduras and El Salvador.
of Honduras, ICE and CNFL of Costa Rica - while in others shares are held by transmission companies - INDE of Guatemala, ETESA of Panama, and ENTE of Nicaragua. In the case of El Salvador the utility CEL and the transmission company ETESAL own the shares jointly. The private shareholders are Endesa
of Spain and ISA from Colombia.
The establishment of a regional electricity regulator has been envisaged. While the IDB
had suggested that electricity generating companies should not be allowed to hold shares in the transmission company, this has apparently been accepted by the governments of Central America.
The project is currently managed by a unit under the Central American Electrification Council (Consejo de Electrificación de América Central - CEAC).
(IDB), having initially pledged $170 million in hard and soft loans to the six Central American countries, the Spanish
government, offering $70 million and the Central American nations. The contributions of the Central American nations had been initially estimated at up to US$106 million. However, it turned out that they will rather provide around US$ 35 million in-kind contributions, such as land and existing facilities. It had also been reported that Endesa would contribute 20% of the project costs through equity, an amount that was later reduced. Subsequently the IDB had to increase its exposure to US$ 240 million and the Central American Bank for Economic Integration (CBEI) was called in to provide additional support through three loans totaling US$ 90 million. The Colombian firm ISA also joined EPR as a shareholder.
More than 90% of the rights of way for the line had been acquired by May 2007. It is expected that the project can benefit from carbon finance under the Clean Development Mechanism
of the Kyoto Protocol
.
with associated social and environmental costs. Also, there are fears that the dominance of the power sector in Central America by large foreign corporations would be increased. Finally, there are some environmental concerns related to the transmission line itself. The initial Environmental Impact Assessment
financed by the IDB analyzed only the direct impacts of the transmission line and not its indirect impacts from induced power generation.
Wide area synchronous grid
A wide area synchronous grid, also called an "interconnection" in North America, is a power grid at a regional scale or greater that operates at a synchronized frequency and is electrically tied together during normal system conditions...
of the power grids of six Central America
Central America
Central America is the central geographic region of the Americas. It is the southernmost, isthmian portion of the North American continent, which connects with South America on the southeast. When considered part of the unified continental model, it is considered a subcontinent...
n nations. Central America, where few electrical interconnections currently exist, and those that do are often old and unreliable, has been discussing plans to link the region's electricity grids since 1987. The proposed project entails the construction of transmission lines connecting 37 million consumers in Panama
Panama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
, Costa Rica
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....
, Honduras
Electricity sector in Honduras
The electricity sector in Honduras is characterized by the dominance of a vertically integrated utility ; an incomplete attempt in the early 1990s to reform the sector; the increasing share of thermal generation over the past two decades; the poor financial health of the state utility Empresa...
, Nicaragua
Nicaragua
Nicaragua is the largest country in the Central American American isthmus, bordered by Honduras to the north and Costa Rica to the south. The country is situated between 11 and 14 degrees north of the Equator in the Northern Hemisphere, which places it entirely within the tropics. The Pacific Ocean...
, El Salvador
El Salvador
El Salvador or simply Salvador is the smallest and the most densely populated country in Central America. The country's capital city and largest city is San Salvador; Santa Ana and San Miguel are also important cultural and commercial centers in the country and in all of Central America...
, and Guatemala
Guatemala
Guatemala is a country in Central America bordered by Mexico to the north and west, the Pacific Ocean to the southwest, Belize to the northeast, the Caribbean to the east, and Honduras and El Salvador to the southeast...
. It is not clear if Belize
Belize
Belize is a constitutional monarchy and the northernmost country in Central America. Belize has a diverse society, comprising many cultures and languages. Even though Kriol and Spanish are spoken among the population, Belize is the only country in Central America where English is the official...
, which buys much of its power from Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, will also be included. SIEPAC would cost about US$320 million without the interconnections with Mexico (US$ 40m), Belize (US$ 30m) and Panama (US$ 200m). and, back in 2003, was scheduled for completion in 2006. More recently, it has been estimated it would be completed in 2009. There is controversy about the benefits and indirect environmental impacts of the project.
Expected benefits
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 hydroelectric 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 kV
Volt
The volt is the SI derived unit for electric potential, electric potential difference, and electromotive force. The volt is named in honor of the Italian physicist Alessandro Volta , who invented the voltaic pile, possibly the first chemical battery.- Definition :A single volt is defined as the...
transmission line, with a planned capacity of 300 MW between Guatemala and Panama, as well as improvements to existing systems. SIEPAC likely will involve upgrading links and building 230 kV links between Guatemala and Honduras, and Honduras and El Salvador.
Ownership and regulation
SIEPAC would be owned by a Regional Operations Entity (Entidad Proprietaria de la Red - EPR), created in 1999 with registration in Panama, and comprising the public utilities and transmission companies of the six participating countries (75%) and private capital (25%). In some countries integrated utilities are shareholders - ENEEENEE
The Empresa Nacional de Energía Eléctrica , is Honduras's government owned and operated electrical power company, operating within the Electricity sector in Honduras.- By the Numbers :* ENEE employs more than 2,500 people....
of Honduras, ICE and CNFL of Costa Rica - while in others shares are held by transmission companies - INDE of Guatemala, ETESA of Panama, and ENTE of Nicaragua. In the case of El Salvador the utility CEL and the transmission company ETESAL own the shares jointly. The private shareholders are Endesa
Endesa (Spain)
Endesa, S.A. is the largest electric utility company in Spain. The firm, a majority-owned subsidiary of the Italian utility company Enel, has 10 million customers in Spain, with domestic annual generation of over 97,600 GWh from nuclear, fossil-fueled, hydroelectric, and renewable resource power...
of Spain and ISA from Colombia.
The establishment of a regional electricity regulator has been envisaged. While the IDB
IDB
IDB can mean:* Inter-American Development Bank, also known as IADB* IDB Communications Group, Inc., a constituent of MCI Inc.* Illegal Diamond Buying, the term used at the turn of the 19th-20th century for diamond trading outside the De Beers cartel....
had suggested that electricity generating companies should not be allowed to hold shares in the transmission company, this has apparently been accepted by the governments of Central America.
The project is currently managed by a unit under the Central American Electrification Council (Consejo de Electrificación de América Central - CEAC).
Financing
The funding for the project was originally expected to come from the Inter-American Development BankInter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
(IDB), having initially pledged $170 million in hard and soft loans to the six Central American countries, the Spanish
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
government, offering $70 million and the Central American nations. The contributions of the Central American nations had been initially estimated at up to US$106 million. However, it turned out that they will rather provide around US$ 35 million in-kind contributions, such as land and existing facilities. It had also been reported that Endesa would contribute 20% of the project costs through equity, an amount that was later reduced. Subsequently the IDB had to increase its exposure to US$ 240 million and the Central American Bank for Economic Integration (CBEI) was called in to provide additional support through three loans totaling US$ 90 million. The Colombian firm ISA also joined EPR as a shareholder.
More than 90% of the rights of way for the line had been acquired by May 2007. It is expected that the project can benefit from carbon finance under the Clean Development Mechanism
Clean Development Mechanism
The Clean Development Mechanism is one of the "flexibility" mechanisms defined in the Kyoto Protocol . It is defined in Article 12 of the Protocol, and is intended to meet two objectives: to assist parties not included in Annex I in achieving sustainable development and in contributing to the...
of the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
.
Criticism
Critics have argued that the project will not make electricity cheaper for consumers in Central America, but may actually increase tariffs. Some critics also argue that SIEPAC will facilitate electricity exports to Mexico and not contribute to expand access in Central America. It is also argued that much of the increased generation capacity facilitated by SIEPAC would be in the form of large hydropowerHydropower
Hydropower, hydraulic power, hydrokinetic power or water power is power that is derived from the force or energy of falling water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as...
with associated social and environmental costs. Also, there are fears that the dominance of the power sector in Central America by large foreign corporations would be increased. Finally, there are some environmental concerns related to the transmission line itself. The initial Environmental Impact Assessment
Environmental impact assessment
An environmental impact assessment is an assessment of the possible positive or negative impact that a proposed project may have on the environment, together consisting of the natural, social and economic aspects....
financed by the IDB analyzed only the direct impacts of the transmission line and not its indirect impacts from induced power generation.