Panama awarded its latest tender, the LPI ETESA 01-25, with an average price of approximately USD 23.86/MWh, one of the lowest values recorded in its market. This result sets a new benchmark for the sector and redefines investment expectations in the country.
In this context, during the "It had to be said and it was said" live event of Strategic Energy, the former Secretary of Energy of Panama, Jorge Rivera Staff , declared: "The prices we are seeing for our market are very low energy offer prices," and highlighted that this is "the first long-term tender we have had in the country after many years."
The process once again includes contracts of up to 20 years, a key factor in explaining the aggressiveness of the bids. This extension allows for structuring projects with lower financial risk and greater predictability, resulting in more competitive prices compared to the short-term tenders that predominated in recent years.
The change is significant. For the past five or six years, calls for proposals had been short-term, which shifted more risk to the developers and limited the competitiveness of their bids. With longer timeframes, projects can be better structured financially, ultimately resulting in more competitive prices.
Even so, the final result exceeded initial market projections. As Rivera Staff explained, market participants expected values in line with recent trends, but competition and contractual conditions ultimately reduced bids. This presents a significant opportunity for the system, especially in a context where the evolution of marginal cost remains a key variable.
Predictability emerges as a key factor in this behavior. Establishing a tender schedule allows companies to anticipate events, develop stronger proposals, and reduce uncertainty. This environment, along with clearer regulatory signals, fosters greater participation and increased competitive pressure.
Despite its size, the Panamanian system retains characteristics that position it as a benchmark in the region. It is a market with over 30 years of development, consolidated regulations, and an evolution that integrates diverse technologies. Throughout this process, the incorporation of natural gas-fired generation has been key to maintaining reliability, especially as a complement to renewable energy sources.
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This foundation allows us to move to new stages, although not without questions. One of the main challenges that arises with such low values is the actual capacity to execute the awarded projects. " Will a project like this be viable at these prices? That's the first question that comes up ," stated Rivera Staff.
In this case, the profile of the winning companies inspires greater confidence. These are players with a presence and experience in the regional market, which reduces the risk of speculative strategies that have affected some projects in the past. Even so, regulatory oversight will be crucial to ensure that commitments are met fully and on time.
This process is part of a broader strategy that includes five tenders , and new calls for bids have already been launched. The next round has attracted more than 70 offers, suggesting a sustained level of competition and the possibility that this price trend will continue in the short term.
In this context, opportunities also arise to improve the design. The possibility of moving towards open bidding between technologies could intensify competition and allow prices to more directly reflect the efficiency of each solution.
If the awarded prices remain in place over time, the system could see improvements in electricity rates and overall competitiveness. "If they remain in effect for the next few years, the impact on electricity rates and market competitiveness will be significant," Rivera Staff stated.
At the same time, the scenario also reveals a consolidation of players with a strong regional presence, who concentrate the main awarded contracts. This reinforces the idea of a more structured market, with greater execution capacity and less exposure to deviations.
Outside the public sector, Rivera Staff remains involved in the energy industry, developing technological solutions applied to demand. His focus is on energy efficiency, integrating tools such as the Internet of Things and artificial intelligence to optimize consumption. The initiative has already received regional recognition and plans to expand into other Latin American markets.
Taken together, the combination of low prices, long-term contracts, and greater predictability marks the beginning of a new era for Panama. The challenge will be to maintain these conditions over time and consolidate them as a stable foundation for the development of the electricity system.