Guatemala, Panama and Honduras enter a new PPA phase with over 3 GW at stake
- Özcan Berk Atakan
- 2 days ago
- 3 min read
With active tenders underway in all three countries, Central America is moving toward more competitive power purchase agreement (PPA) schemes for large-scale projects, a model that is increasingly being watched beyond the region.
Central America has entered a new phase in energy contracting, characterised by large-scale procurement processes, intense competition and clearly defined timelines that are beginning to bring order to the regional power market.
Over the past few months, Guatemala has awarded tenders with significant oversubscription, Panama has activated long-term contracts, and Honduras has moved forward with the largest tender in its history. Altogether, more than 3,000 MW are currently in play across the three markets.
The key factor is not only the volume of capacity involved, but also the simultaneity of these processes. In Guatemala, the Generation Expansion Programme 4 (PEG-4) tender received bids exceeding 1,000 MW against demand for just 235 MW. At the same time, the PEG-5 call is already underway, aiming to award 1,400 MW through 15-year power purchase agreements, with contracts scheduled to be awarded on 30 January 2026.
Honduras, meanwhile, is preparing to contract 1,500 MW through successive bidding rounds. This tender, the most significant ever launched in the country, responds to a structural need of the power system and enjoys broad consensus among both public and private stakeholders.
Panama is advancing in parallel with 20-year contracts and is preparing additional tenders before mid-year as part of a broader procurement roadmap extending to 2029. Notably, this schedule incorporates energy storage as an eligible technology, allowing batteries to participate alongside generation projects in future processes.
Behind these figures lies a structural shift in market design. Competitive tenders are replacing more discretionary contracting schemes, helping to reduce regulatory risk. According to Quantum, a regional advisory firm consulted by Energía Estratégica, “tenders are the most competitive and transparent mechanism for the buying and selling of energy and capacity”, a definition that helps explain why these processes have gained widespread acceptance across Central America.
Guatemala currently stands out as the most mature market, with more than 15 years of experience in auction-based procurement using successive bidding rounds for both short- and long-term contracts. This continuity has helped build trust between buyers and bidders, steadily increasing competitive pressure and driving more efficient outcomes.
PEG-4 sent a clear signal to the market, not only because of the scale of the oversupply but also due to the number of projects willing to compete under stable rules. The results have reinforced investor interest ahead of PEG-5, consolidating Guatemala’s position as a regional benchmark for power procurement.
This effect is beginning to replicate elsewhere. Panama has taken note of the Guatemalan model, although it has so far opted for sealed-bid tenders. On 29 January, bids were submitted for 20-year contracts linked to wind and hydropower generation, in a process aimed at securing long-term supply and price stability.
In addition, Panama plans to launch new tenders before mid-year to contract both energy and capacity, with particular attention on the conversion of fuel-oil-fired plants to natural gas. While there is interest in adopting successive bidding rounds, such a shift would require significant regulatory adjustments, which are progressing gradually.
The most decisive inflexion point, however, is emerging in Honduras, where the planned 1,500 MW tender is seen as unavoidable. Quantum notes that “all stakeholders have recognised successive bidding rounds as the most appropriate, efficient, transparent and competitive mechanism”, a level of consensus that leaves little room for backtracking. Delaying the process would entail high technical and political costs, while prolonging existing system imbalances.
The combination of scale, competition and predictability is now drawing attention beyond Central America. Argentina, for example, is among the markets closely observing these schemes, particularly following recent changes in its wholesale electricity market that shift responsibility for contracting energy and capacity for regulated users to distribution companies.
Although key regulatory definitions are still pending, the Central American experience offers a concrete reference on how to structure procurement processes that bring order to the market, attract investment in generation and reduce the overall cost of supply.
The message from the region is clear: well-designed tenders, backed by stable rules and genuine competition, do more than lower prices. They restore predictability to power markets that have long been fragmented. Central America is no longer experimenting with models; it is executing, scaling up and setting the agenda.
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