Panama has launched a $300 million Green, Resilient, and Inclusive Development Policy Loan (DPL) with the World Bank to enhance its electricity sector. This initiative, part of a broader $600 million loan package, focuses on modernizing the energy sector, promoting renewable energy, and improving resilience to climate change.
Modernization of Panama electricity modernization
The Panamanian government has secured a $300 million Green, Resilient, and Inclusive Development Policy Loan (DPL) from the World Bank to strengthen its electricity sector. This loan, which is part of a broader $600 million package, aims to modernize the energy sector, promote renewable energy, and improve resilience to climate change.
The first DPL of $300 million focuses on enhancing the electricity sector’s efficiency, transparency, and inclusivity. The second DPL, which is expected to be approved later this year, will address water resources management.
Alfredo Thorne, World Bank Director for Panama, highlighted the importance of the project. “This project aims to improve the efficiency, transparency, and inclusivity of the electricity sector, as well as its resilience to the effects of climate change,” he said. “The reform program will also help Panama meet its climate goals under the Paris Agreement.”
Electricity Sector Reforms for Panama electricity modernization
The government of Panama has implemented several reforms to modernize its electricity sector. Key measures include the approval of the Electricity Subsector Law (Law 76 of 2023) and its regulatory decree. These reforms aim to strengthen the Electricity Transmission Company (ETESA) and improve the governance of the electricity sector.
One of the major changes is the establishment of a single buyer model for electricity purchases. This model is expected to enhance transparency and improve the financial sustainability of the sector. The reforms also include measures to support the development of renewable energy projects and promote gender equity in the energy sector.
The reforms also focus on improving the financial sustainability of the electricity sector. The single buyer model is designed to streamline electricity purchases, making the process more transparent and efficient. Additionally, the reforms aim to increase the participation of women in the energy sector, promoting gender equity and inclusivity.
Renewable Energy Targets for Panama electricity modernization
Panama has set ambitious renewable energy targets as part of its climate goals. The government plans to increase the share of renewable energy in its electricity mix to 30% by 2030 and 70% by 2050. To achieve this, the government has introduced regulations to promote renewable energy projects, including distributed generation and energy storage.
The government has also taken steps to promote resilience to climate change. The Ministry of Environment has approved a National Climate Change Plan for the electricity sector. This plan outlines strategies to mitigate climate risks and reduce greenhouse gas emissions. The plan also includes measures to improve the resilience of the electricity sector to the impacts of climate change.
Financial Support from the World Bank for Panama electricity modernization
The $300 million loan from the World Bank is provided by the International Bank for Reconstruction and Development (IBRD). The loan has a maturity period of 19 years, including a five-year grace period. The World Bank’s support is expected to help Panama achieve its climate and energy goals, while also improving the efficiency and transparency of its electricity sector.
The World Bank’s support for Panama’s electricity sector reforms is part of a broader effort to promote green, resilient, and inclusive development. The bank’s focus on climate change and renewable energy aligns with Panama’s commitment to the Paris Agreement and its national climate goals.
The reforms in Panama’s electricity sector are expected to have a significant impact on the country’s energy landscape. By promoting renewable energy, improving efficiency, and enhancing resilience to climate change, these reforms will help Panama meet its climate goals and ensure a more sustainable future for its electricity sector.
