In 2023, almost 62% of Panama’s electricity came from low-carbon sources, while fossil fuels supplied the remaining 38%. Hydropower dominated the clean electricity mix, providing nearly 48% of total consumption, with wind and solar each contributing about 7%. Among fossil sources, gas supplied almost 22% and coal around 4%, with other fossil fuels making up the balance. Panama therefore already gets well over half its electricity from clean sources, but fossil generation remains substantial, contributing to climate change and air pollution.

Is Electricity Growing in Panama?

Electricity consumption per person in Panama reached a new record in 2023, at about 2,900 kWh—roughly 100 kWh, or 4%, above the previous record set in 2021. This growth is welcome as electrification and expanding digital services increase electricity needs. However, clean electricity generation did not keep pace: it stood at about 1,800 kWh per person, around 400 kWh, or 18%, below its 2021 record. That disappointing decline highlights the need to grow low-carbon generation alongside overall electricity consumption.

Suggestions

Panama can build on its hydropower base by expanding solar and wind while considering nuclear electricity as a complementary source of dependable low-carbon generation. Nearby El Salvador provides a useful solar example, generating 17% of its electricity from solar, while Chile reaches 24%. Uruguay demonstrates the potential of wind in Latin America, generating about a third of its electricity from that source. For nuclear development, Panama could study the United Arab Emirates, where nuclear supplies 20% of electricity, and France, where it supplies about two-thirds. Learning from these regions could help Panama develop a diversified clean electricity supply, supported by stronger grids and storage, to meet growing demand and reduce fossil fuel use.

History

Panama’s low-carbon electricity history has largely been shaped by hydropower growth and fluctuations. Selected gains in the late 1970s and 1980s ranged from 0.4 to 0.6 TWh annually. The 1990s brought further increases, followed by a 0.8 TWh decline in 1998 and a 1 TWh rebound in 1999. Similar fluctuations continued in the early 2000s, with declines in 2001 and 2003 followed by recoveries in 2002 and 2004. Strong gains returned in the 2010s, including increases of 1.3 TWh in 2012 and 1.2 TWh in 2015, before a sharp 2.8 TWh drop in 2019. Hydropower recovered by 2.3 TWh in 2020 and another 1 TWh in 2021, but fell by 2 TWh in 2023—a concerning setback that reinforces the case for expanding and diversifying Panama’s clean electricity generation.

Electricity Imports and Exports

Balance of Trade