Large power users want greater flexibility in Panama

Wednesday, January 24, 2018

BNamericas spoke to Jorge Azcarraga, president of Panama's association of large electricity clients, Agrandel, and group executive Leslie González in order to find out more about some of the issues these large offtakers are facing in the Central American nation.

BNamericas: How has the activity of large power consumers in Panama evolved in recent years?

Azcarraga: Today a large client, which begins at 100kW demand compared to 500kW previously, can participate in the market and buy directly from a generator, but to do that requires investment; to purchase a commercial measurement system.

Although nowadays in Panama there are many prospects that demand over 100kW, it's not very attractive for them to participate, because although a generator may offer them a lower rate, everything will depend on how much they can save, because they have to pay for the commercial measurement system, which can cost between US$35,000-60,000.

Today the role of large clients is becoming more relevant because now there's more interest in selling them energy. Generators in the spot market are not securing interesting prices.

Of the 2,500 possible qualified large clients, the number of those that have invested in a commercial measurement system and secured a contract with a generator is only 20.

There's also apathy, or rather a situation in which supply and demand are not converging because of the economic model that began in Panama of holding short, medium and long-term power supply calls. So, all the generators went with this model and don't have a commercial department; they don't knock on doors.

That's why the association is trying to generate awareness to let large consumers know there are these supply possibilities. We're pushing for a change to the power sector law that would introduce the role of a marketer to fill that gap.

BNamericas: What impact will the introduction of natural gas-fired power production have on prices?

González​: The spot market price is expected to drop, but if the plants can't expand to secure new smaller contracts to the ones we have today due to the restrictions of the law, there will be no reflection in the price.


BNamericas: One of the members of your association is Cemex, which in Mexico has pushed strongly for self-generation. Is this something taking place among your members?

Azcarraga: That's something we have seen, but as Panama doesn't have that much industry, self-generation at the individual level is limited to a few cases. Perhaps due to economies of scale it could be attractive to large cement companies. One of the good things of having gas in Panama is that it could make self-generation more viable.

BNamericas: Could you tell me a little about cost optimization efforts in Panama, such as energy efficiency and savings?

Azcarraga: More than optimization to reduce consumption, what we're seeing is a lot of interest on the part of companies that want to enter Panama with renewable technologies, mainly solar. Our members are also being approached to purchase wind generation contracts.

There are companies that are changing air conditioning units and it's possible to pay for them with the savings made by more efficient machines, and other companies are installing solar panels on their rooftops to reduce consumption and changing to LED lighting.

BNamericas: Are there any other sector challenges that have to be addressed?

Azcarraga: We have problems related to fluctuations in the system which affect industry a lot because we don't have backup plants to dispatch productive load, and there are also still blackouts.