Assessing Renewable Energy Power Purchase Agreements in Panama


IRENA’s regulatory component of the CECCA initiative has found that despite the deployment of wind and solar PV in Panama in recent years, project developers remain uncertain about existing and future investment incentives for these technologies in the country. These concerns relate to a quickly saturating power market, limited abilities to trade into the regional market, and sub-optimal design of PPAs for wind and solar PV.

As a result, IRENA, in close coordination with the National Secretariat of Energy and in consultation with project investors and stakeholders, has developed a financial modelling tool to assess the investment incentives resulting from PPAs in Panama. The tool is tailormade to evaluate the current Panamanian context, model the financial impacts from rule changes currently facilitated by the National Energy Secretariat; and allows for the modelling of rule changes which go beyond the current discussion in Panama. 

IRENA recently held a meeting to provide an overview of the relevance of renewable energy PPAs, and the role of policy makers, regulators and the private sector in undertaking PPAs. Following a panel discussion, a one day hands-on training was provided to local Panamanian stakeholders on the use of the tool for modelling various PPA designs and strategies.

Following the discussions and training sessions, some key takeaways emerged for the future development of the model:

  • Several project developers expressed interest to continue working with the model and supporting IRENA’s work in the region;
  • There is a growing perception that the grid is struggling to accommodate increasing levels of VRE, making the need for stronger reserves / capacity markets more important;
  • The model could benefit from several adjustments, given the current structure of PPAs / electricity market in Panama. These include:
    • A limited ability to sell into the wholesale market when operating under a PPA with a DSO
    • A lowered estimate for transmission losses and WACC assumptions
    • Running the model purely on equity financing

Agenda of the meeting ‘Assessing Renewable Energy Power Purchase Agreements in Panama

Presentations from ‘Opening Session on Renewable Energy PPAs’

Renewable Energy PPAs
Hameed Safiullah, Programme Officer, IRENA

Presentations from session ‘Introduction to the PPA Assessment Tool’

Introduction to the PPA Tool
Gabriel Zeitouni, Project Manager and Energy Specialist, COWI

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