Skip to main content

A Green Revolution under the Central American Sun: Solar energy in Honduras

[caption id="attachment_2625" align="alignleft" width="448"] Solar energy in Honduras: the roof of Embotelladora de Sula[/caption] The same sun that bathes Central America’s beaches is an increasingly valuable asset for many companies in the region. That is the case with the Honduran bottling plant Embotelladora de Sula, one of the largest rooftop photovoltaic projects in Latin America.
ADMIN
SEPTEMBER 15 2015

A Green Revolution under the Central American Sun: Solar energy in Honduras

This new solar plant in sunny San Pedro Sula—three hours from Tegucigalpa—is one of the first large-scale photovoltaic projects in the country. It shows the potential for renewable energy—not just to reduce companies’ carbon footprint but also to increase competitiveness.

Energy prices tend to be higher in Central America than in other places, given the region’s dependence on imported fossil fuels, which account for 45 percent of energy use. For countries that depend disproportionately on oil for electricity generation, price volatility complicates planning for the medium or long term.

Of course, one company by itself is not going to solve national energy problems, much less resolve the regional challenges brought by climate change. Thanks to private and public sector efforts, photovoltaic capacity in Central America is expected to jump ten-fold over the next year.

The IDB seeks to play a leadership role in this upward trend. Working with the Nordic Development Fund, we have set up a $50 million fund to support companies’ energy efficiency and reduce their dependence on oil through renewable energy. Depending on the size of the project, the fund can provide direct loans ranging from $500,000 to $5 million to finance up to half the cost of an energy project. Along with financial support, the program provides technical assistance to assess needs and analyze the costs and benefits of different technologies.

Over the past year, the IDB supported energy audits and feasibility studies for dozens of Central American companies to determine what solutions work best. For an agricultural company in Costa Rica that generates a high volume of organic waste, it was determined that turning this readily available material into biofuel would be the best option. For other companies, we demonstrate how reducing energy costs through installing new equipment or upgrading production systems can make sense.

Embotelladora de Sula will rely on the sun, as well as certain efficiency measures, for energy savings. During the next few days, the IDB will extend a loan for the project to Grupo Corinsa, which owns the plant.

This modern facility—which bottles soft drinks, juices, and purified water, 24 hours a day, 7 days a week—began a solar pilot project more than a year ago and is about to expand it significantly. Although solar energy cannot be the only solution for a company that operates 24/7, it can have a big economic impact. In this case, once all the solar panels are installed they will cover 34,000 square meters (approximately 366,000 square feet) and generate 3 megawatts of electricity, enough to supply 20 percent of the plant’s total electricity needs.

Technological advances like this make renewable energy more attractive. The initial investment can often be recovered in four or five years, while the benefits last for the long term. 

We have seen enormous interest in green technologies throughout Central America, which is expected to install around 550 MW of solar per year through 2018.

In 3Q2014, Honduras added a total of 72MW alone. The IDB is at the cutting edge of this burgeoning market with additional projects in San Pedro Sula and elsewhere. For companies willing to invest in the environment—and at the same time improve bottom lines—this IDB fund provides a unique opportunity.

This project is featured in the IDB Sustainability Report.

This post was previously published on January 23, 2015.

AUTHORS

Energy

Related Posts

  • Building resilience to health risks in the private sector

    A Six-Step Roadmap to Enhance Private Sector Resilience to Health Risks

    An IDB Invest poll shows nearly 60% of projects have temporarily ceased work or faced major project delays because of COVID-19. Early lessons coupled with existing best practices in public health and safety principles provide a six-step action road map to build resilience against such risks.

    Read more
  • Can 'flotovoltaics' be a future partner for hydropower systems?

    Can 'flotovoltaics' be a future partner for hydropower systems?

    To address changing paradigms, a new technology has been proposed: hydropower plants that enable solar generation or hybrid hydro-solar systems.

    Read more
  • Solar energy: The revolution spurring development in Honduras

    Solar energy: The revolution spurring development in Honduras

    When Invema plant, the main plastic recycler in Honduras starts operating, a success formula resonates. It is one of the commercial companies that took advantage of the photovoltaic energy boom in the country. Its case demonstrates how the private sector’s investment in solar energy can facilitate greater economic and sustainable development for the country. Six years ago, the executives of the firm decided to install solar panels in the company, so it could generate its own power. This initiative promised a 20% reduction in energy consumption as well as a significant reduction in greenhouse gases emissions of polluting gases. And so it was. Today, Invema obtains energy savings up to 30% in electricity and reinvests in the focus of its business, recycling, so much so that it is now manufacturing the bottles that Coca-Cola uses in Central America. “We are very proud, because thanks to the solar panels, IDB Invest’s doors/channels opened up and allowed us to make the investments we dreamed,” says George Gatlin, the manager of Invema, which is located in the northern city of San Pedro Sula. Invema is part of many companies and private consortia that have opted for photovoltaic energy since Honduras decided to reform its electricity subsector to revert its electricity matrix from thermal to renewable. The reforms began in 2012, when generation using fossil fuels accounted for 70% compared to 30% for renewables. This thermal hegemony was reflected in increasing oil billing, carbon dioxide emissions, high tariffs up to US$0.30 per kilowatt (KW) produced, and frequent rationing. Following the reforms, led by the government with the advisory services of the Inter-American Development Bank (IDB), there was an upsurge in renewable energy until the energy matrix was completely reversed compared to 2012. The latest report from the Central Bank of Honduras (BCH) in 2018 records a 75% electricity generation based on renewable sources, and an 11% share of photovoltaic energy. This percentage translated into 433 megawatts (MW) of installed capacity at the end of 2016, placing Honduras in the lead of solar generation in Central America and third in Latin America, after Chile and Mexico. “We are witnessing a revolution in the electricity sector, not just in Honduras, but worldwide, because energy storage is changing the concept, points out Carlos Jácome, IDB energy specialist who has participated in the reforms process in Honduras. “The Bank support comprises studies and soft financing. Later, the savings make it possible to improve the productivity of these companies because they can use what they no longer pay in energy to expand their businesses,” comments Jácome. Since 2012, the IDB and IDB Invest have provided technical assistance to Honduran commercial, industrial, and institutional sectors to investigate the technical and financial feasibility of photovoltaic projects. To date, 22 studies have been completed for projects ranging from 40 kilowatts (kW) to nearly 3 MW of installed capacity. Official reports indicate that interest in photovoltaic projects have increased due to a reduction in about 40% of the installation costs over the last five years. Behind this innovation there are three combined components that have resulted in a successful formula: i) the impetus of government that created favorable conditions for investment; ii) the decisions made by entrepreneurial companies; and iii) the IDB’s ability to evaluate and finance the projects. The initial investments in photovoltaic development in Honduras involved a shared risk for IDB Invest and its clients. Nonetheless, what made the difference is the technical capabilities of the Bank for evaluating and support for this type of investments. The Honduran experience encourages entrepreneurship and new markets while demonstrating that IDB Invest is the partner of choice for innovative markets. Experiences of this kind should be replicated in the region. The first photovoltaic investments began in 2015, when 388 MW were installed, followed by 45 MV more in 2016, according to reports from the National Electrical Energy Company (ENEE). According to the ENEE, the Honduran commercial and industrial solar energy market is quite different from what it was in 2012, starting with changes in electricity billing (between 11 and 18 cents per kW per hour), installation costs for panels, legal regulations, and the availability of photovoltaic manpower in the region. In addition to this, national capacities have developed with the installation and administration of photovoltaic projects. “Before, if a Canadian, Spaniard or a Costa Rican person did not show up to supervise the project it didn’t move forward. Now the Hondurans themselves have been strengthening all these positions. There is a friendly environment for investment,” notes Elsia Paz, President of the Honduran Renewable Energy Association (EHER), one of the entities that emerged in the context of these reforms. Download the full story here: “Solar Energy: The Revolution Spurring Development in Honduras” Subscribe to receive more content like this! [mc4wp_form]

    Read more