Another key difference from the primary models discussed above is that, under the SAPP market framework, only excess generation is traded. In other words, member states first ensure that they are able to cover their own demand before offering generation capacity to the SAPP regional market. In addition, power can also be traded through SAPP on an emergency basis, to help meet unexpected shortfalls.

SIEPAC

Focused efforts began in the late 1980s to create a regional electricity market spanning the six Spanish-speaking Central American countries of Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Panama, though initial regional market integration steps began 30 years earlier.10 SIEPAC, the organised regional market that eventually emerged in the early 2000s is the purpose-built 230 kV transmission line and associated infrastructure to support the regional market, the Regional Electricity Market (Mercado Eléctrico Regional [MER]).11 The two terms – SIEPAC and MER – are used interchangeably in this case study to refer to the regional market, unless otherwise clear from context. 12

Market overview

The MER is sometimes referred to as the “seventh market”, operating on top of the six national markets. That is, all six of the member countries have their own national markets – several of them advanced markets in their own right – and there is significant structural variation across these markets. Participation in the MER at the national level depends on national-level laws and regulations. Thus, Honduras and Costa Rica participate in the MER through their vertically integrated national utilities, while generators, marketers, distributors and large customers from the remaining four countries participate directly in the MER.

Figure 39. SIEPAC (MER) overview and context

Note:This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Source: World Bank (2019a), Population, Total; World Bank (2019b), GDP per Capita (current LCU); IDB (2017), Central American Electrical Integration: Genesis, Benefits and Prospects of the SIEPAC Project; EOR (2016), Operational Planning for Central America 2016-2017.

SIEPAC is made up of a diverse set of countries from Central America.

10 The seventh Central American country, Belize, is English-speaking, with population more than ten times smaller than that of Panama, the country with the next-smallest population in Central America Belize’s transmission system is not interconnected with any other Central American transmission system; its only international interconnection is with Mexico.

Electricity Interconnection: Technology and Prospects for Cross-Regional Networks. More detail, in Spanish, can be found in IDB (2017), Integración Eléctrica Centroamericana: Génesis, Beneficios y Prospectiva del Proyecto SIEPAC [Central American Electrical Integration: Genesis, Benefits and Prospects of the SIEPAC Project].

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