Why this is important to Wisconsin businesses: Rapid GDP growth is causing strong demand for energy, at the same time the country is seeking to become an energy hub within Central America.
Panama is the fastest growing and most dynamic economy in Latin America, with GDP growth of 6.0 percent in 2015 and estimated 6.3 percent in 2016. With a population of 3.9 million, a GDP of $46.2 billion in 2014, and a diversified economy based on a well-developed service sector (the Panama Canal, logistics services, banking, free trade zones, insurance, container ports, tourism, etc.), the country has maintained sustained economic growth, averaging 8.2 per year over the past decade. All of this growth has become a challenge for the energy sector by demanding more electricity and new energy sources.
Panama has traditionally relied mainly on hydroelectric production to meet its energy needs. However, during the last few years it has sought to change its energy mix due to the effect of climate change on its water reservoirs. Today, Panama's energy matrix is composed of hydropower (56.6%), thermal/oil (41.34%) and other sources (2.06%) including wind and solar.
Total electricity generated in 2014 was 8,994 GWh, while total electricity sales made by distribution companies (also known as total demand) were 7,346 GWh. Panama expects that its energy demand will grow at an average rate of 5 percent through 2018. This huge demand for new energy sources has created challenges but also opportunities within the power sector, not only to supply internal demand but also to position Panama as an energy hub for the Central American region.
What seems certain is that strong economic growth will continue creating business opportunities in the energy sector. Those opportunities identified are likely to be found in renewable energy plants (wind/solar/gas), energy efficiency and storage, transmission lines and substations, consulting services and infrastructure, equipment and technology supply.