In 2023, more than half of Panama’s electricity consumption—about 62%—came from low-carbon sources, while fossil fuels supplied the remaining 38%. Hydropower dominated the clean electricity mix, providing almost half of all electricity, while wind and solar each contributed about 7%. Among fossil sources, gas supplied roughly 22% of electricity and coal about 4%, with other fossil fuels accounting for the rest. Panama therefore has a strong clean electricity foundation, but substantial fossil-fuel use still contributes to climate change and air pollution.

Is Electricity Growing in Panama?

Electricity consumption per person is growing: in 2023 it reached about 2,900 kWh, roughly 100 kWh above the previous record set in 2021—a rise of about 4%. However, low-carbon electricity generation per person fell well below its earlier peak. It stood at about 1,800 kWh in 2023, compared with nearly 2,200 kWh in 2021, a decline of around 400 kWh, or 18%. The new consumption record is encouraging, but the retreat in clean generation is concerning: Panama needs low-carbon electricity to grow alongside demand from electrification and emerging uses such as AI.

Suggestions

Panama can expand clean electricity generation by accelerating solar deployment, adding wind capacity, and considering nuclear power as a complementary source. Relevant regional examples include El Salvador, where solar supplies 17% of electricity, and Chile, where it supplies 24%. Uruguay demonstrates wind’s potential, generating about a third of its electricity from wind. Panama can learn from these places’ deployment experience while adapting projects to local conditions. For nuclear development, France generates about two-thirds of its electricity from nuclear, while the US state of South Carolina generates just over half. Their experience offers lessons in building expertise and sustaining substantial clean electricity output. Together, solar, wind, and nuclear could strengthen Panama’s low-carbon supply and support rising electricity consumption.

History

Panama’s low-carbon electricity history has been shaped largely by hydropower growth and substantial year-to-year fluctuations. Selected increases between 1978 and 1985 ranged from 0.4 to 0.6 TWh annually. In the 1990s, further gains were interrupted by a 0.8 TWh decline in 1998, followed by a 1 TWh rebound in 1999. The early 2000s likewise alternated between declines and recoveries: losses of 0.9 TWh in 2001 and 0.6 TWh in 2003 were followed by gains of 0.9 and 1 TWh, respectively. Strong expansion returned in the 2010s, including increases of 1.3 TWh in 2012 and 1.2 TWh in 2015, followed by smaller gains in 2017–2018. A sharp 2.8 TWh drop in 2019 was largely reversed by gains of 2.3 TWh in 2020 and 1 TWh in 2021, but another 2 TWh decline in 2023 underscores the importance of expanding and diversifying clean electricity generation.

Electricity Imports and Exports

Balance of Trade