In 2023, almost 62% of Panama’s electricity consumption came from low-carbon sources, while about 38% came from fossil fuels. Hydropower supplied nearly half of all electricity, making it the largest clean source. Wind and solar each contributed about 7%. Among fossil sources, gas accounted for almost 22% and coal for around 4%, with other fossil sources supplying the remainder. Panama therefore already has a mostly low-carbon electricity mix, but fossil generation remains substantial, contributing to climate change and air pollution.

Is Electricity Growing in Panama?

Electricity consumption per person is growing: in 2023 it reached a new record of about 2,900 kWh, around 100 kWh, or nearly 4%, above the previous record set in 2021. However, clean electricity generation per person has not kept pace. It stood at about 1,800 kWh in 2023, roughly 400 kWh, or 18%, below its 2021 record of almost 2,200 kWh. The new consumption record is encouraging, but the shortfall in low-carbon generation is concerning. Panama needs faster clean electricity growth to support electrification and future demand, including from AI infrastructure.

Suggestions

Panama can increase clean electricity generation by accelerating solar deployment, expanding wind generation, and considering nuclear power. Nearby El Salvador, where solar supplies 17% of electricity, offers a particularly relevant regional example; Chile’s 24% solar share also demonstrates the scope for a larger solar contribution. Uruguay generates 31% of its electricity from wind, providing another useful Latin American reference. For nuclear development, Panama could learn from France, where nuclear supplies 67% of electricity, and the United Arab Emirates, where it supplies 20%. These examples offer lessons in planning, workforce development, and sustained clean electricity investment. Combining more solar and wind with consideration of nuclear would broaden Panama’s low-carbon electricity supply.

History

Historically, Panama’s low-carbon electricity development has been led by hydropower. Selected annual increases in the late 1970s and 1980s ranged from 0.4 to 0.6 TWh. The 1990s brought further gains, followed by a 0.8 TWh reduction in 1998 and a 1 TWh rebound in 1999. Annual changes alternated again in 2001–2004, ending with a 1 TWh increase in 2004. Strong additions followed during the 2010s, including 1.3 TWh in 2012 and 1.2 TWh in 2015, with further gains in 2017–2018. More recently, hydropower generation shifted down by 2.8 TWh in 2019, up by 2.3 TWh in 2020 and 1 TWh in 2021, then down by 2 TWh in 2023. Building additional solar, wind, and potentially nuclear generation would help sustain overall clean electricity growth.

Electricity Imports and Exports

Balance of Trade