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Regional power integration : structural and regulatory challenges (English)

The Central America Regional Electricity Market (MER) trades electricity and transmission capacity among six Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. The market differs from other electricity markets worldwide because it has its own regulatory body and system operator. Economic integration of the Central American countries has followed a natural evolution. The continuous increase in the demand for goods and services has been accompanied by political and institutional arrangements leading to the materialization of commercial and trade agreements aimed at benefiting the nationals of all the integrated nations at the lowest possible cost. This is particularly true in the electricity sector, which provides a key development service for the achievement of sustainable growth. In fact, electricity integration through cross-border power trade has been discussed by the Central American countries since the late 1970s. This report analyzes the progress of the Central American integrated electricity market, including the institutional, legal, regulatory and contractual framework of the MER and of each of the six national markets. It then identifies the main barriers that will have to be addressed in order to ensure a successful evolution to full operation of the Central American Electrical Interconnection System (SIEPAC) interconnection system and achieve true market integration.


  • Document Date


  • Document Type

    Energy Study

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  • Country

    Central America,

  • Region

    Latin America & Caribbean,

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  • Doc Name

    Regional power integration : structural and regulatory challenges

  • Keywords

    regional market;investment in information technology;legal and regulatory framework;operation of power pool;natural gas transmission system;Energy Sector;wholesale electricity market;economies of scale;regional power market;regional electricity;power utilities;power utility;national electricity commission;power purchase agreement;energy and power;benefits of integration;national market;functioning electricity market;andean development corporation;efficient power plant;cost of electricity;national electricity authorities;efficient energy system;national power utility;source of electricity;regional power system;national energy;electricity industry structure;energy sector development;source of fuel;demand for good;gas transmission network;primary energy supply;total energy consumption;sale of asset;private sector enterprise;electricity demand growth;national regulatory body;terms of consumption;national energy commission;formulation of policies;transmission and distribution;settlement of transaction;amount of fuel;security of supply;misallocation of resources;resolution of dispute;open electricity markets;international power trade;national electricity market;case of emergency;power generation facility;liquefied natural gas;renewable energy potential;quality of supply;regional regulatory commission;private service provider;security and reliability;legal regulatory framework;law and regulation;modern energy service;Sustainable Economic Development;marginal cost perspective;power exchange;energy contracts;transmission right;electricity sector;regional regulation;transmission line;regional generation;generation capacity;system operator;price control;regional transmission;large consumer;reserve margin;market rule;spot market;electricity subsector;bilateral agreement;electricity system;contract market;regulatory barrier;institutional framework;private investor;electricity exchange;long-term contract;Regulatory Bodies;open access;limited capacity;commercial company;national interest;transmission company;clear rules;domestic demand;stated objective;small economy;power supply;market seller;generation cost;market mechanism;gap analysis;installed capacity;investment cost;expansion plan;institutional barrier;efficiency gain;oil product;market integration;power shortage;power contract;integration initiative;transmission expansion;electricity need;potential energy;retail tariff;government intervention;existing contract;legal framework;political influence;free access;energy intensity;modern technology;electricity coverage;contract clause;exchange administration;power transaction;energy security;social activities;guarantee payment;institutional operation;market condition;primary focus;differential pricing;free market;excess power;contract obligation;contract period;investment risk;power producer;market price;transmission fee;local demand;regulatory decision;thermal plant;uniform rule;thermal option;wholesale price;regulatory challenge;increased trade;international transaction;energy intensities;controlled price;political issue;adequate resources;intraregional trade;commercial policy;contractual framework;demand equation;government backing;energy authority;energy exchange;local regulation;political authority;common market;preferential treatment;market development;trading arrangement;energy production;cost of energy production;local market;market level;electricity regulation;supply constraint;oil production;price source;future investment;electricity production;supply cost;trade agreement;physical infrastructure;oil resource;geothermal resource;power transfer;mountain range;institutional strengthening;economic integration;transmission capacity;trade electricity;participating country;financial resource;expansion strategy;Energy Projects;power line;political will;investment environment;fuel saving;primary reason;legal entity;legal entities;energy crisis;national network;original agreement;specific regulation;legal right;national regulation



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Regional power integration : structural and regulatory challenges (English). Washington, D.C. : World Bank Group.