A project in Central America aims to build on the region’s foundations as a global leader in renewable energy, help it reduce its growing reliance on fossil fuels and improve its sustainability. CDKN’s Carolyn Fry interviews Adam Dolezal of the Worldwatch Institute about findings from the project’s first phase.

UPDATE (June 2013): you can now read the report of the first phase in English, The Way Forward for Renewable Energy in Central America  and in Spanish, La Ruta hacia el Futuro para la Energia Renovable 

Central America has long sourced energy from renewable sources. In 2011, 64.8 per cent of installed electricity capacity came from large-scale hydropower. However, although water is regenerated during the electricity-generating process, this energy cannot be considered “clean” because of the negative environmental and social affects that arise when rivers are dammed. Moreover, increasing amounts of fossil fuels have been used in electricity generation since the 1990s. Hydrocarbons now account for 37.9 per cent of energy generation, while the transport sector relies almost exclusively on oil.

The CDKN-funded project The way forward for renewable energy in Central America aims to help steer the region towards new forms of renewable energy, particularly smaller-scale technologies that are less environmentally and socially damaging than large-scale hydropower. There is good potential to generate power from small-to-medium-scale wind, solar, biomass and geothermal technologies, and, thanks to recent efforts to form a region-wide grid, real opportunities for this energy to be distributed across Central America. Phase one is now drawing to a close, with promising findings.

“We’ve built a very strong partnership with our regional partner INCAE Business School, based in Costa Rica and Nicaragua,” explains Project Manager Adam Dolezal, of the Worldwatch Institute in Washington. “Ana María Majano has come on board as a senior project advisor. She is Associate Director of the Latin American Center for Competitiveness and Sustainable Development at INCAE Business School, a former environment minister in El Salvador and the regional expert on renewable energy. She has helped us build a network of energy experts for us to consult across the region.”

The project began by investigating the current energy situation in Central America. The researchers found that 45 per cent of energy demand comes from the residential sector, 29.1 per cent comes from transportation, 17.3 per cent comes from industry, 6.5 per cent comes from public services and around one per cent comes from agriculture and construction. Although the region has made good progress in stabilizing the grid and extending it to bring electricity to formerly unconnected areas, some seven million people still have limited, or no, access to modern electricity services.

By holding workshops and conducting interviews, the project team found that traditional biomass or fuelwood accounts for 82 per cent of residential energy use in Central America. However, there is little data on its impacts on health, deforestation and gender inequality because it is part of the informal economy. In Nicaragua, Honduras and Guatemala, more than two-thirds of households still use wood for cooking. “The lack of data about traditional biomass use is one area that we’d like to address going forward,” says Adam.

For many communities in remote areas in Central America, grid connection is unlikely to happen due to geographic inaccessibility and the high cost of extending the grid. Distributed electricity is not simply an alternative, but the only option for these communities. To achieve electrification, the choice is between diesel generators, which will only become more expensive as fuel costs continue to rise, or off-grid renewable energy, such as solar, wind, microhydro or biogas. Distributed renewable energy offers a development path that is locally based, allowing individuals and communities to be closely involved and to have control over their own energy supply.

Over the past two decades, the countries of Central America (Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) have integrated their political and economic systems through the Tegucigalpa Protocol and almost completed a regional electricity grid. This represents a great opportunity to expand the renewable energy sector. “The solar developed so far has been mostly for off-grid installations but we’re starting to see more grid-based commercial and industrial solar facilities being developed, so that’s another area we’ll focus on,” Adam adds.

A disadvantage of the regional grid is that it could be detrimental to the spread of renewables if supporting policies are not put in place. “There are some plans to build large natural gas-fired power plants, coal power plants and new super-large hydropower dams in some countries,” says Adam. “This is being done with the express purpose of exporting energy to other countries, facilitated by the new regional grid system.” If cheap fossil-fuel based energy becomes too widely available, it could jeopardise new clean renewables by making them financially unviable.

On a more positive note, the regional grid also has the potential to benefit the clean renewable energy sector. The existence of the Central American Electrical Interconnection System (SIEPAC) legal framework for the wholesale electricity market will increase investor confidence in the stability of market regulation. In addition, the expansion of transmission lines and substations to areas with suitable renewable resources, has made it more cost-effective for investors to develop renewable energy plants in some parts of the region.

The project has gathered together 20 or so examples of best practice so far. These include an off-grid 17-kilowatt small hydro project in Nicaragua that is generating electricity for 32 households, a church and a school; the use of solar thermal technology to dry fruits and vegetables in Guatemala; and a grid-tied 31.5megawatt (MW) biomass power plant in Belize, fuelled primarily by bagasse. Bagasse is the dry, pulpy residue left behind after the juice has been extracted from sugarcane.

Phases two and three will build on the work of Phase one by producing energy roadmaps, outlining the best pathways that governments can take to increase their use of clean renewable energy. These will be presented to the relevant politicians with a view to the information being integrated into policy, and people trained to use this data to develop new renewable projects. The aim is to steer governments towards incentivising clean energy, rather than that from large-scale hydropower or hydrocarbons, so that Central America can continue its tradition of sourcing energy from renewables and improve its record of sustainable development at the same time.

The project The way forward for renewable energy in Central America is a collaboration between the Worldwatch Institute and the INCAE Business School, with funding from the Energy and Environment Partnership with Central America and CDKN for Phase one.