Honduras is moving forward with the addition of 80 MW from the Regional Electricity Market (MER) to bolster its supply and reduce its reliance on emergency purchases. The contracts include 50 MW from Panama and 30 MW from Nicaragua, with a reported price of approximately 8 US cents per kWh .
The operation coincides with the debate on an 18-article reform that seeks to reorganize the subsector, modify the institutional structure of the National Electric Energy Company (ENEE), and redistribute functions related to the generation, transmission, distribution, and operation of the system. The initiative has already passed two debates and is pending final legislative approval.
Both processes address different timeframes. The regional procurement process responds to an immediate need for power , while the regulatory discussion will determine how Honduras will incorporate new capacity, manage its networks, and mobilize investments over the coming years.
The agreement also highlights one of the main challenges of the market: planning contracts with predictable prices , preventing urgent needs from forcing the purchase of electricity under less competitive conditions in the spot market.
Honduras participates in the MER and has regional interconnections with Guatemala, El Salvador, and Nicaragua. This infrastructure allows it to import or export electricity depending on generation availability, system needs, and bids submitted by authorized agents.
The 80 MW were allocated through a competitive bidding process initiated by ENEE, which maintains its role as the purchaser within the existing framework. The process began during the previous administration and subsequently completed its legislative procedures.
The price of around 8 cents per kWh is significant compared to other benchmarks in the Honduran market. According to information gathered for this article, some wind power contracts are around 14 cents per kWh and certain solar agreements are around 11 cents , although each price depends on the technology, the award date, and the agreed-upon terms.
The price difference demonstrates the importance of the timing of the transaction. When demand must be met immediately, the buyer's negotiating power decreases and exposure to higher prices increases.
Central American integration thus functions as a complementary tool to address summer energy shortages, generation constraints, or operational contingencies. Imports, however, do not replace the addition of local capacity, the expansion of networks, or the reduction of technical and non-technical losses .
The reform that would redefine ENEE
Congress is considering a transformation that includes changes to the organization of ENEE and the creation of an independent operator in charge of the system and the market . The proposal also incorporates energy storage into the regulatory framework and expands the contracting mechanisms between generators, retailers, and consumers.
One of the central points of discussion is the potential replacement of the single-buyer model with a more competitive system. Under this new structure, certain users would be able to negotiate their supply with other providers, according to thresholds and conditions that are still being debated in the legislature.
The initial proposal would reduce the limit applicable to large consumers, currently set at 5 MW, to a level close to 100 kW . This modification would significantly expand the pool of customers eligible for direct contracts, although its final scope will depend on the approved text.
The opening could create opportunities for new renewable energy projects, storage systems, and bilateral agreements. At the same time, it raises questions about the functions the state-owned company will retain, the conditions for accessing infrastructure, and the compensation for using transmission and distribution networks .
The reorganization envisions establishing separate units or companies within the state structure to manage the various activities. Congress maintains that the objective is to modernize the company without transferring its ownership or strategic assets to the private sector.
“ This law will not privatize under any circumstances; what it seeks is to rescue the National Electric Energy Company ,” stated Tomás Zambrano , president of the National Congress, in defending the project promoted by the Executive.
The official position links the reform to the need to improve the functioning of the transmission, distribution, generation, and marketing sectors. The ruling also incorporates provisions designed to protect state ownership of infrastructure considered strategic .
“ What is being created are companies within the National Electric Energy Company itself to improve the transmission, distribution and marketing of energy services in our country ,” explained a pro-government deputy during the parliamentary debate.
The separation of functions aims to make operational costs and responsibilities more transparent, although its implementation will require defining how the assets, liabilities, contracts and financial obligations of ENEE will be distributed.
The debate also extends to the control of the office. The proposal envisions transferring functions and resources from the National Dispatch Center to a new body, whose composition, governance, and degree of independence are still under review.
The legislative observations focus on the participation of public and private stakeholders within the future operator. The design must avoid conflicts of interest between those competing in the market and those making decisions about the scheduling and dispatch of power plants .
Discussions are also underway regarding how private companies will utilize state-owned transmission lines, distribution networks, and substations. The final framework will need to establish access tariffs, investment commitments, connection rules, and competitive conditions to prevent preferential treatment.
Another point under review is ENEE's ability to compete within the new framework. An opening that excludes the state-owned company from certain segments could weaken its market position and accelerate the departure of users with the best consumption and payment profiles.
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Therefore, defining the rules must balance the inflow of private capital with the sustainability of the public company. Competition can broaden supply options, but it also requires mechanisms to prevent ENEE from being saddled with the highest-risk customers and least profitable obligations .
The differences surrounding the new market
The reform has not yet reached full consensus among the main political forces. Discussions include proposals to financially stabilize ENEE, combat theft, reduce losses, and strengthen oversight of the institutions that will manage the market.
The debate brings together the National Party, which leads the current government; the Liberal Party; and Liberty and Refoundation (Libre), a reformist and left-wing force that led the previous administration.
The differences are not limited to a division between the ruling party and the opposition. Within the political spheres themselves, there are differing positions on the speed of the opening, the corporate governance of the new operator, and the treatment of public assets.
One concern is separating the generation, transmission, and distribution sectors without a prior, comprehensive assessment of the infrastructure and financial obligations. An institutional division without clear criteria could simply transfer existing imbalances to the new entities .
The composition of the operator represents another sensitive point. The body must have technical independence and oversight capacity, without being subject to the direct control of the very participants whose operations it is meant to coordinate.
The discussion also cannot be separated from the system's losses. The reform is presented as a tool to improve efficiency, but its outcome will depend on operational, commercial, and technological measures that allow for the recovery of unbilled energy and increased revenue.
The future framework will have to reconcile four objectives: preserving public ownership of strategic infrastructure, facilitating new investments, ensuring neutrality in dispatch, and preventing further deterioration of ENEE's finances .
The quality of the regulations will be just as important as the legislative text itself. Separation of functions, open access to networks, and the participation of new marketers will require transparent procedures, public information, and sufficient regulatory capacity.
A 1500 MW tender on the horizon
The regulatory definition will have a direct impact on the planned 1500 MW tender to incorporate renewable generation, thermal capacity, and storage. This process represents the most significant electricity procurement in Honduras in recent decades.
The initiative aims to meet growing demand, strengthen security of supply, and reduce reliance on emergency procurement. However, its implementation was contingent upon the approval of the reform, and the awarding of contracts was postponed until 2027 to provide greater certainty before committing to the agreements.
Following the approval of the new framework, the government plans to establish the terms and conditions for developers to prepare their bids. The timeline will depend on the speed with which the reorganization of ENEE, payment guarantees, and the contracting model are resolved.
The private sector believes the outcome will depend on the clarity of the rules, legal certainty, risk allocation, and the bankability of the contracts. The Honduran Renewable Energy Association (AHER) and the Honduran Association of Small Renewable Energy Producers (AHPPE) have linked the competitiveness of the bids to the stability of the new regulatory framework .
Contractual terms will also influence prices. Shorter periods make it harder to amortize projects and can raise the offered rates, especially when there are uncertainties about the transfer, sovereign guarantees, or the risk of the purchasing counterparty.
ENEE's financial situation represents another determining factor. The company has accumulated an estimated debt of more than USD 4.5 billion , while payment delays to generators have eroded the confidence of developers, financial institutions, and suppliers.
A counterparty with liquidity problems increases the perceived risk, complicates financial closing, and raises capital costs. The restructuring of the state-owned company will be as crucial as regulatory reform to ensure that the future tender attracts investment and receives competitive prices.
During the previous administration, former Energy Minister Erick Tejada presented the modernization of the market, the reduction of losses, and the bidding process for 1,500 MW as components of a single roadmap. His report included investments of nearly USD 1 billion in generation, transmission, and distribution, as well as a reduction of almost four percentage points in ENEE's losses.
Following the change of government in 2026, the market awaits decisions regarding the continuity of the process, the timeline for the call for bids, and the institutional reorganization of the state-owned company.
Developers believe that maintaining consistent regulatory signals will be crucial to restoring confidence and avoiding further reliance on emergency contracts. The pause can be used to refine the tender design , but a prolonged delay would increase the risk of shortfalls and postpone necessary investments.
Storage also plays a strategic role. Batteries would allow for managing the variability of renewable energy generation, shifting electricity to peak demand hours, and reducing the use of thermal power plants with higher variable costs.
Its deployment requires specific rules for remunerating services provided, accessing the network, and participating in dispatch. The inclusion of this technology in the new framework expands investment opportunities , although its scope will depend on the final text and its subsequent regulations.
The purchase of 80 MW through the MER ( Regional Energy Market) provides a concrete example of the value of anticipating needs and leveraging regional competition. The agreement allows for meeting immediate requirements at a lower price than that seen in certain local contracts and during emergency situations.
The system's sustainability will depend on combining competitive regional acquisitions, new installed capacity, sufficient networks, and a financially viable ENEE. The reform will define who will operate the market, how the infrastructure will be remunerated, and under what conditions the capital needed to develop the next 1,500 MW will be mobilized .