Electrical Integration is a Blast

SIEPAC

Last summer I interned at a small non-profit in San Diego called the Institute of the Americas (IOA). The Institute’s mission is to promote cooperation between private and public sector actors to bring about good policies, regional integration and development in Latin America and the Caribbean. I worked specifically with one of IOA’s most active programs, the Energy Program. One of the goals that the IOA has been working towards in the energy sector is Central American electrical integration.

Electrical integration in this region has long been an elusive objective. Efforts to date have centered on interconnection of the region’s electric grid, the Central American Electrical Interconnection System (SIEPAC) and creation of a new, regional electric market (MER). After more than 15 years of development, SIEPAC will soon be ready to start transmitting energy throughout the region. However, while the infrastructure is in place, there is still much to be done politically to make sure that the electric markets of the six nations in the region are compatible.

And that’s where the Institute comes in. Last summer, the IOA was awarded a State Department grant to carry out different workshops and panels designed to bring together different actors in the electricity industry and get them to start talking about what actions need to occur to make the dream of regional electrical integration a reality.

The first workshop took place in Washington, DC last week, and I was invited to serve as rapporteur. Participants included representatives from different regulatory agencies across Central America, as well as representatives of the Inter-American Development Bank, the Inter-American Dialogue, AES Corporation, the Council of the Americas and the U.S. Department of State.
The first day consisted of a series of presentations that established the current energy climate and the state of the regional integration. Each speaker emphasized the dire need of consolidating the electricity market in order to reach the millions of people in the region who do not have access to energy. In addition, many speakers stressed the importance of developing clean, sustainable energy. Two speakers drew comparisons between the Central American integration project and the cases of the European Union and the U.S.-Mexico. Overall, all participants seemed excited and recognized the benefits of creating a unified market for electricity in the region.

The second day, the conversation focused on the challenges and the long road ahead. Participants cited the regulatory asymmetries that exist in each individual country and the obstacles involved in consolidating the electricity market in the region. Costa Rica is the only country in the region that has a monopoly in the energy industry, while the rest of the region has an open market with no barriers to entry. Costa Rica has no interest in modifying the structure of its electricity market, so that represents and additional hurdle for regional integration.

So although much progress has been made, the journey is far from over. At the end of the roundtable, participants targeted points of discussion for the next workshop, which will be held next month in Central America. However, the workshops represent a critical first step: initiating a dialogue between the different actors in the region. The workshops will also serve as an arena where participants can openly discuss their differences and strategies to maximize benefits. Central American electrical integration is a project fifteen years in the making, and it is very possible that it will become a reality in the next couple of years. This is a very exciting time for the region and I’m glad my internship offered me the opportunity of being a part of it.

Post by Vanessa Orco

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