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ABP (Anything But Petroleum)

Tuesday, March 13, 2012

Two tenders for power-generation projects - one in El Salvador, the other in Guatemala - may be important indicators of energy policy in the region as a whole.

The situation in both cases involves a decision to reduce dependence on petroleum as a source of electrical energy.

In part, this reflects a commitment to invest in renewable energy.

Even more significant is a concern that thermal generation will have a strong negative impact on local economies, as a result of high oil prices.

The winning bids in both countries are likely to be awarded this month.

The Salvadoran project, of 350 megawatts, will sell energy to the country’s two major distributors, a unit of United states-based AES, and Colombia's Empresas Públicas de Medellín (EPM).

The Guatemalan tender, for 800 megawatts, involves categories which include wind, hydro, biomass, coal and natural gas, as well as bunker.

Power from the project will be distributed by three companies, one owned by EPM, the other two by Spain’s Unión Fenosa.

Governments in both countries want to promote sustainable, low-pollution energy.

But many renewable sources of energy are inconsistent. Wind power varies not only with seasons, but even with time of the day. Hydroelectric energy works well during rainy months, but not in the dry Central American summer.

Given its priority of cutting energy costs, El Salvador will accept bids from coal-fired plants, but not from those which burn petroleum products.
Meanwhile, Salvador-based Cutuco Energy is bidding on the projects in both countries.

Cutuco aims to generate more than 400 megawatts from natural gas shipped to Central America in liquefied form. Natural gas is a clean fuel. Equally important, its price has come down significantly in recent years, as major new sources have been discovered.